IMF and World Bank ignore NGOs, new study says

9 June 2004 by Emad Mekay

WASHINGTON,May 26, 2004(IPS/GIN) — Attempts by civil
society groups to influence policies at the World Bank World Bank
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

the International Monetary Fund IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.
(IMF) under a controversial consultation programme have been mostly fruitless, a new study says.

Those groups might have to demand that their input be
taken seriously if they still intend to influence the
process, known as the Poverty Reduction Strategy Paper Poverty Reduction Strategy Paper
Set up by the World Bank and the IMF in 1999, the PRSP was officially designed to fight poverty. In fact, it turns out to be an even more virulent version of the structural adjustment policies in disguise, to try and win the approval and legitimation of the social participants.

(PRSP), adds the report, ’Rethinking Participation’, by
ActionAid USA and ActionAid Uganda.

“The high-profile effort to use ’participation’ rhetoric to get citizens’ groups to stop protesting in the streets and sit down at the table has now run aground because, after four years of attempted participation in the processes, no major policy changes have resulted in the key World Bank and IMF loan conditions,” it says.

But a senior World Bank official told IPS the results were actually mixed, and that there had been cases when civil society groups and labour unions participating in the PRSP process influenced borrowing countries despite the advice of the Bank and IMF.

The process also gave groups unprecedented access to
policy-making in developing countries, he added.

A PRSP is a roadmap of a country’s macro-economic,
structural and social policies and programmes that is
submitted to the World Bank and the IMF before a
government can receive funding. Designing those plans is
supposed to be a “participatory process” that includes
civil society and development partners, as well as the two lenders.

Borrowing countries need to submit a PRSP every three
years to qualify for assistance from the Washington-based institutions.

According to the World Bank, as of Apr. 30, some 37
countries have submitted PRSPs, including Burkina Faso,
Benin, Ghana, Mozambique, Vietnam, Armenia, Bolivia,
Bangladesh, Yemen and Pakistan. Some 48 others have
submitted their initial plans, a watered-down version of
the PRSP.

But the Papers, which are supposed to emerge from a
government-led two-year process that includes "town hall
meetings" with citizens’ groups and non-profit Profit The positive gain yielded from a company’s activity. Net profit is profit after tax. Distributable profit is the part of the net profit which can be distributed to the shareholders. agencies,
are now seen as designed to reduce global protests against
the Bank and IMF, charges the new report.

Their critics accuse the two bodies of pressing policy
changes on borrowing countries via the loan conditions
that are included in the PRSPs, a charge the two lenders

Those loan conditions are based on a set of free trade and
free market-oriented reforms, including privatisation,
deregulation and financial liberalisation, and removal of
trade protection for domestic companies , all of which
contribute to Third World poverty, the critics add.

The World Bank and IMF contend that the PRSPs are
homegrown and that governments ultimately decide whose
advice to take when designing their economic programmes.

"It is entirely possible that we have in the context of
our advisory relation to governments advised them to do
things that civil society interlocutors might feel were
not in the best interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. of the country or the government
but it’s really the government that’s left to decide,"

said John Page, director of the Poverty Reduction Group at
the World Bank.

The ActionAid report also charges that the PRSP process
has been structured so that borrowing governments will
limit their plans to those they know will be approved by
the executive boards of both the IMF and World Bank.

"There is a lot of evidence to suggest that borrowing
governments are self-censoring themselves and what they
permit to be discussed in these consultations,"
said Rick
Rowden, a policy analyst with ActionAidUSA and a co-author
of the new paper.

"They don’t want citizens’ groups coming up with all
kinds of alternative economic policies that they know the
World Bank and IMF will never accept, and they don’t want
any alternative policies to make their way into the
national PRSP strategy paper or else the paper might get
rejected by the World Bank and IMF and jeopardise their
access to more loans."

But Page said the two institutions are far more flexible
in their demands and do allow inputs from civil society.

"It’s true, obviously, that governments know the
perspective and the point of view of the Bank and the Fund
but it isn’t the case that they have to subscribe in
detail to every view that’s expressed by the Bank in order
to have their PRSPs considered favourably and endorsed by
the board,"
Page said in an interview.

He cited trade liberalisation as an example where most
PRSPs were influenced by civil society groups, which
generally favour gradual — if any — liberalisation,
rather than by the pro-liberalisation bent of the two

Most PRSPs are silent about the role that trade will play
in poverty reduction and do not put forward ambitious
programmes for changing a country’s trade policy, added

"I’d say that those are cases in which governments have
tended to listen to their own business community, to their
labour movement, or to their civil society much more than
they listened to the Bank and the Fund,"
he said.

But ActionAid argues that governments appear to be
allowing civil society groups only minimal influence on
the PRSP process.

When Angolan groups met in June 2001 to organise their
input into that government’s plan, for example, they
complained that officials seemed reticent to organise a
consultation. The only PRSP workshop open to them was
confined to social matters rather than “macroeconomic” and
other structural adjustment Structural Adjustment Economic policies imposed by the IMF in exchange of new loans or the rescheduling of old loans.

Structural Adjustments policies were enforced in the early 1980 to qualify countries for new loans or for debt rescheduling by the IMF and the World Bank. The requested kind of adjustment aims at ensuring that the country can again service its external debt. Structural adjustment usually combines the following elements : devaluation of the national currency (in order to bring down the prices of exported goods and attract strong currencies), rise in interest rates (in order to attract international capital), reduction of public expenditure (’streamlining’ of public services staff, reduction of budgets devoted to education and the health sector, etc.), massive privatisations, reduction of public subsidies to some companies or products, freezing of salaries (to avoid inflation as a consequence of deflation). These SAPs have not only substantially contributed to higher and higher levels of indebtedness in the affected countries ; they have simultaneously led to higher prices (because of a high VAT rate and of the free market prices) and to a dramatic fall in the income of local populations (as a consequence of rising unemployment and of the dismantling of public services, among other factors).

policy issues, which are
considered to be the ones that can most influence poverty.

Many groups in developing countries, such as Honduras,
Vietnam and Uganda, report that they were barred from
participating in discussions about macroeconomic and
structural policies during the official PRSP

A May 2003 report by the Centre for Latin American
Research and Documentation noted, "the participation of
Bolivian civil society in the definition of macroeconomic
programmes is virtually nil, above all with reference to
the PRGF (an IMF offshoot of the PRSP)"

But Page said the reality on the ground is far more
complex than ActionAid describes.

"The experience has been so varied that in many cases
there has been an opening into the PRSP process and I
think that most civil society groups would say that it
never existed before in the area of policy-making."

Though imperfect now, that participation will have
long-term implications, he added.

"This process of observing the participatory process,
evaluating it, having the boards of the Bank and the Fund
discuss it and then feeding that information back will
result in a deeper and more durable participatory
he said.

Source: Inter Press Service.

The full report cited in this article can be found on the
web at:



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