Memorandum by Alison Marshall, World Development
Below, the White Paper on International Development
of December 2000 "Eliminating World Poverty: Making Globalisation
Work for the Poor" is referred to simply as the White Paper
with the paragraph number following.
THE HIPC INITIATIVE
WDM notes with pride that the UK was one of
the first lenders to agree to write off 100 per cent of the bilateral
debts it was owed by countries as they progressed through the
HIPC Initiative. Most other G7 lenders have followed suit in agreeing
to 100 per cent write-offs. The result is that as countries progress
through the HIPC Initiative an increasing proportion of their
debt service payments are to the multilateral lenders. These debt
service payments to the IMF and World Bank are still very high
relative to the levels of poverty in the countries concerned and
relative to the amounts that the governments are able to spend
on health. However, the IMF could afford to write off 100 per
cent of the debt it is owned by HIPC countries, by using its gold
Question: what action will the UK take
to encourage the IMF to follow the lead of the bilateral lenders
in recognising the blight of debt service payments on the lives
of the poor, and therefore agreeing to write off 100 per cent
of the debts it is owed by the HIPC countries as they progress
through the HIPC Initiative?
WDM joins with the Government in welcoming the
endorsement of the International Development Targets by the World
Bank and IMF (White Paper paragraph 170).
However, WDM does not agree with the Government's
assessment that the IMF is "uniquely placed to offer the
technical advice and support for countries to maintain the macro-economic
foundations required for successful growth and poverty reduction"
(White Paper paragraph 168). The IMF certainly has a unique role,
but the past experience of countries implementing IMF designed
Structural Adjustment Programmes does not give WDM confidence
that IMF advice on macro-economic policies results in successful
(The number of people living on less than $1
a day is rising in Sub-Saharan Africa, Latin America and South
Asia. The number living on less than $2 a day has risen from 2.55
to 2.8 billion since 1990.)
The White Paper recommends that the IMF and
World Band should "support open and broad debate within countries
about the design of their policies, and encourage independent
assessment of the impact of these policies on the poor and on
the environment". (paragraph 171)
Question: how will UK Government encourage
the IMF to institute independent assessments of the impact of
their policies on the poor, particularly ex-ante impact assessments?
Given that the PRSP "approach will be applied
not only to the Heavily Indebted Poor Countries, but is intended
also to become the basis for all concessional resource flows from
the World Bank and the IMF and other development agencies".
(White Paper paragraph 307) it is all the more important that
the PRSP approach is efficacious.
A concern for many commentators has been the
IMF's "one-size-fits-all" approach to country strategies.
In this context we welcome the Government's recognition "that
the approach will need to vary according to national circumstances"
Question: how will the UK Government
act to ensure that the IMF is more sensitive to the different
circumstances of countries with which it works?
Bearing in mind that the IMF has to endorse
or approve PRSPs, another key concern has been that the IMF does
not demonstrate flexibility over the macro-economic strategies
that it deems acceptable, despite asserting that a key characteristic
of PRSPs is that they should be country owned. While recognising
the importance of sound macro-economic management, WDM believes
that governments should be able to choose policies which have
positive distributional impacts.
Question: how can the Government encourage
the IMF to extend its menu of acceptable macro-economic policy
options to include more of those developed by individual Heavily
Indebted Poor Countries?
In order to reach International Development
Targets sufficient resources must be available within countries
for the effective implementation of PRSPs. WDM believes that the
IMF is continuing to prioritise neo-liberal macro-economic policies
which do not necessarily deliver these resources, and which, indeed,
frequently have a detrimental effect on the poor.
Question: how can the Government ensure
that the sequencing of macro-economic policies recommended by
the IMF prioritises the allocation of resources for poverty reduction?
In this respect it is interesting to note that,
to date, the requirement for civil society participation in the
preparation of PRSPs, or I-PRSPs, has not generally been extended
into governments' decision-making on macro-economic policy (eg
in Kenya, Ghana and Uganda). Civil Society Organisations are consulted
on spending priorities (eg on health and education), but complain
of having no part in decisions on the financial programming that
sets the context and resource levels for that spending.
Question: how can the Government encourage
the IMF to ensure that civil society is able to contribute to
all parts of the PRSP design processes?
IMF STRUCTURES AND
The White Paper clearly identifies areas where
the IMF could improve its operations so as to be more effective
in achieving poverty reduction.
For example in paragraph 169 "We believe
that IMF programmes should take better account of their impact
on the lives of the poor".
Paragraph 171 "We will encourage the IMF
to take greater account of the relationship between stabilisation,
structural issues, poverty and growth in programme design"
. . . "and encourage independent assessment of the impact
of these policies on the poor and on the environment".
The White Paper (paragraph 311) asserts that
the Government "will continue to encourage the World Bank
and IMF to make the necessary changes to their own structures
and working methods in a way that is consistent with their commitment
to the Poverty Reduction Strategy process".
Question: what specific proposals will
the UK Government be taking to the IMF to encourage it to change
its structures and methods?
17 January 2001