World Bank-IMF annual meetings 2008
News||12 October 2008|
This page is being updated regularly. Check back for more news about the events inside and around the annual meetings 2008. A meeting between UK NGOs and the DFID Secretary of State, Douglas Alexander, was held on September 30.
With the events in the financial world of the past two weeks topping headlines, it is little surprise that the WB/IMF annual meetings have been dominated by the financial crisis and events in the banking sector. That leaves little room for discussions about development and low-income countries, let alone the thorny subject of climate change.
A discussion of the global economy and financial markets usually is the first item on the agenda of the International Monetary and Financial Committee (IMFC), but most expect it really to be the only item of discussion all weekend. The IMFC is a committee of 24 finance ministers or central bank governors from around the world and is generally seen as setting the policy direction and providing advice to the IMF. This year's IMFC meeting and communiqué is a bit of a crap shoot. Usually the country with the IMFC chairmanship organises a deputies meeting about a week in advance of the IMF annual meetings. This gives the ministers' senior staff a chance to debate the issues and come up with a draft of the communiqué. But the IMFC was chairless until late last week, and it was unclear as of writing whether a deputies meeting will actually happen.
That likely makes the outcome of the meeting even more dependent than usual on the communiqués of the G24 and G7 finance ministers who are meeting on Friday. Financial markets are looking to the G7 statement for signs of coordinated government response to the financial crisis. The question is as yet unanswered as to whether the G24 (a group of developing countries and emerging markets) will be able to make an impact on global management of the financial crisis. Many academics and commentators have called for better integration of emerging markets into discussions on global financial markets. And people have been raising the subject of a global financial regulation with a international regulatory authority. That is a big step, and one that might be realised with renewed calls from a host of countries, including the Commonwealth heads of state, for a so-called Bretton Woods 2, an international conference of countries to refashion the international financial architecture and remake international institutions.
BWP will bring you analysis of the content of the communiqués and the story behind the positions as they become available. Currently out: G24 communiqué, G7 plan of action, IMFC communiqué, Development Committee communiqué.
After a highly controversial report on agriculture last year, this year's World Development Report (WDR) might not turn many heads. It is the fuzzy concept of "economic geography", covering a vast array of economic and development concepts including migration, urbanisation international trade, transport, capital movements, and other related concepts. It presents the possibility of reconnecting with some of the issues brought up in the WDR 2006 on inequality, for which follow-up has been scanty and inconsistent. But it may be one of the least contested or consulted upon WDRs in a long time - the Bank presented preliminary findings in only 3 locations (France, Tanzania, and Cote D'Ivoire). And despite a promise for a discussion draft to be posted in June 2008, nothing more than the November 2007 outline was ever made available on the World Bank's website.
On the agenda for the Development Committee is:
The background papers were exceptionally late this year, only appearing on the website after the development committee meeting had finished.
Development and Climate Change: A Strategic Framework for the World Bank Group - This paper has been analysed in Bretton Woods Update 62. The 1 sentence snapshot: a great piece of rhetoric covering just about everything you could ever think of, but what will the Bank actually do? See:
On the agenda for the IMFC is:
The IMFC papers have now been made available. Suffice it to say financial markets and baking sector meltdowns will be nearly the only topic of conversation. Sovereign wealth funds and the food and fuel price crises remain on the agenda as published, but it is unclear how much time can be devoted to them.
The main paper for the IMFC is the progress report from the IMF managing director Dominique Strauss-Kahn. It gives a summary both of developments over the past 6 months and what the IMF is planning for the future. A few key things stand out from the report. First, the IMF has a very full agenda for the next six months. Aside from working to help contain the financial crisis, the IMF plans to conduct a comprehensive lending review. That means it will fundamentally reconsider all of its existing lending policies, including its highly controversial conditionality. The IMFC paper even acknowledges that the Fund's loans may "come with too many conditions, provide too little financing, and are too costly."
The lending review will have 5 elements: a generic analytical look at all loans and their purpose; loan limits and the cost of loans; conditionality; lending to low-income countries; and a new liquidity instrument. The last element has been a long standing demand of middle-income countries who want the IMF to introduce a facility with very high limits on the amount that can be withdraw but with very low conditionality. This is to help prevent financial crises spurred by currency speculators and sudden withdrawals of capital flows. Strauss-Kahn also issued a separate statement on the lending review.
The other big introduction is a set of "surveillance priorities". Sometimes called a mandate for surveillance, the priorities has been part of efforts by some countries to get more country ownership of the IMF's surveillance agenda. So the Fund will now how rolling three-year priorities that are endorsed by the executive board and by finance minsters and central bankers who sit on the IMFC. The thinking was that ministers from advanced countries who agree on the priorities will then feel more bound to listen to the IMF's policy advice. Seems doubtful that it will work.
The progress report also makes clear that the the usual practice of moving decision making away from the IMF board has been applied to the financial crisis. A recent IEO report found that in times of crisis, the IMF helps coordinate a response but outside of the normal decision making structures. So much for the vaunted near-universal membership and representation systems. When things happen it is still largely the G7 that calls the shots. In describing the response to the crisis so far the paper reports on a coupld of high-level seminars and phone calls, which must have been just a few of the many things that went over the heads of the executive board and bypassed any discussion with most of the Fund's developing country members.
A final note is how the Fund is once again talking about "macro-financial linkages", meaning how developments in the financial and banking sector affect the real economy. This has been on the Fund's agenda since 1998 and the Asian financial crisis. But somehow, despite regular semi-annual exhortation by various committees as well as reports by the IEO, the Fund has never strengthened its analysis in this area as much as was needed. If it had, it would not have been accused of sleeping at the wheel in this financial crisis. That is essentially what the Commonwealth finance ministers said in their communiqué issued on Thursday.
Return here for highlights of meetings hosted by civil society organisations from Bretton Woods Project staff in Washington.
The Bank and Fund have named this year's annual meetings, held in Istanbul, Turkey the 'Road to Recovery.' People around the world struggling in the face of the huge increases in unemployment and poverty caused the what the UN has called the "greatest financial and economic crisis since the Great Depression" may not share the IFI's optimism. However, the IFI's themselves certainly seem to have put themselves back on the road to recovery, with a $500 billion boost to the IMF's coffers from the G20 (see Update 65) and the Bank announcing its highest lending ever (see Update 66).
Doubtless the statements issued at the end of the meetings will restate existing promises to tackle the crisis, but there is little prospect of any further concrete outcomes from the meetings, beyond reannouncing existing initiatives, for example on healthcare and food.
Governance reform will be high on the agenda of both the Bank and Fund, though little concrete progress is expected in either institution. The Bank is likely to only agree on the basic outline of the deal, with details to be negotiated between now and next year's spring meetings deadline. Rich countries, particularly Europeans who have the most to lose, are battling to prevent the significant shift to equality of voting shares that developing countries are demanding. The US will continue to defend its veto. Other issues are effectively off the agenda until the outlines of a deal on voting reform is agreed.At the Fund, the governance reform timetable stretches until 2011, but they seem to be a little further ahead. The G20 promised at least a 5% shift in IMF voting share to "emerging market and developing countries" though the poorest countries were only promised that their share would not go down. This would still leave the rich countries with a majority.
Though this year's World Development Report focusses on climate change, it promises to be the elephant in the room at this year's annual meetings. Having been fiercely attacked for attempting to usurp the UN's leading role in this area, the Bank is keeping a low profile, but continues to move behind the scenes to ensure a leading role in climate finance.
The IMF managed to seal most of the deal on its extra funding at the G20 in Pittsburgh, but WOrld Bank president, Robert ZOellick's efforts to get extra capital for the Bank agreed in Istanbul were rebuffed by developing countries who pointed out that this would inevitably affect voting shares, and so should be discussed as part of the governance negotiations.
The Bretton Woods Project will bring you analysis of the content of all the communiqués and the story behind the positions as the documents become available. So check back here during and after the meetings
13 October: Statements made at the final plenary session
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Published: 12 October 2008 , last edited: 1 October 2009
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