Select Committee on Treasury Appendices to the Minutes of Evidence


Memorandum by Angela Wood, Bretton Woods Project

  The Bretton Woods Project welcomes the publication of the Treasury's second Annual Report to Parliament on UK Operations at the International Monetary Fund. We believe that the report signifies an important step forward for greater accountability and we hope that the Chancellor and his staff will encourage other countries to do likewise.

  In our evidence to the Committee last year (see Treasury Committee Third Report, session 1999-2000, p 94) the Bretton Woods Project made several recommendations for improving the annual report. We are very pleased that this year's report gives a fuller account of the key decisions taken at the IMF and the priority issues on the Executive Board's agenda. The report is a useful summary and a good resource for those who do not follow the debates on a regular basis.

  Having said this, there are still a number of weaknesses that should be addressed if the report is to be an effective means for parliamentarians and others to hold the Treasury and the UK Government to account. The points noted below overlap with remarks made on the first annual report but they remain important and in the interests of greater transparency and accountability it is worth repeating them again here.


  Whilst the report gives a clear presentation of the decisions taken, and indicates the UK's broad support in certain areas, it does not actually detail what the UK's position was on each (ie how it did or would have voted). Nor does it detail why the Government holds a particular view point. Thus, it provides little additional information to that currently available from other sources such as statements made by the International Monetary and Finance Committee and the G7 and the IMF's annual report.

  Action: as a minimum, make reference to other documents such as policy and research papers where the Treasury's policy line is detailed.

  Action: The report should clearly state what the UK's position was on all key decisions and should include an annex detailing the position taken by the UK on all day-to-day Board decisions and what the Board's decision was.


  The report provides a useful overview of the key decisions that have been taken and gives some indication of its priorities; however, it provides no detail of the UK's agenda for the coming year and how this is reflected in the IMF's work programme. This makes it difficult to judge the effectiveness of the UK or what limitations there are to achieving UK goals in a multilateral context. For example, the report notes that the Government supports a change in the process for appointing the IMF Managing Director, but it gives no indication of what changes it would prefer and when decisions on this will be made.

  Action: Include a section which outlines UK priorities for the forthcoming year and identifies key opportunities and a timeline for advancing them.

  Action: Provide detail of on-going key discussions and the anticipated timetable for key decisions.


  In terms of decisions already taken, it would be helpful if the report could critically assess their likely effectiveness and what other steps it may be necessary to take to effectively implement them, bearing in mind that different countries at different stages of development have very different needs.

  For example, whilst the paper discusses the decisions taken on implementing codes and standards it makes no reference to the concerns of developing countries that these may not be relevant to them or what actions the IMF is taking to address this concern. Another example is the discussion on Poverty Reduction Strategy Papers (PRSPs). Although it is useful to know what the PRSPs are supposed to achieve, the paper does not reflect any of the experience so far, for example the difficulties and limitations of the process in practice, and what steps are being advocated to improve the process, for example what guidelines or incentives may be necessary for IMF staff.

  Action: Critically assess the impact of decisions taken and identify further measures the IMF should take to ensure they work effectively.


  In terms of forthcoming discussions, whilst it is important to know the UK's position, others (governments, staff and management) often have conflicting viewpoints or priorities. It would be helpful if these were reflected in the report to give a fuller flavour of the extent of debate and the context in which the UK is working. Moreover, it would be helpful if the report could summarise why the Government does not agree with others' positions.

  Action: Outline the various positions held by other constituencies outside the G7, such as the "emerging markets" and the poorer developing countries.


  Whilst there are debates going on inside the Executive Board, there is also considerable debate outside. Academics and NGOs, amongst others, have been key sources of alternative analysis; however, these wider debates are barely touched upon (in this respect, the report only touches on the Tobin Tax issue). For example, there has been considerable debate concerning the IMF's role and effectiveness in preventing and managing financial crises, and in contributing to poverty reduction efforts.

  There have been several occasions over the last year when NGOs and others have sought to input into Treasury decision-making processes, particularly in relation to key international meetings such as the G7 summit, yet it is unclear to what extent the Treasury takes notice of and acts upon these discussions. It would be helpful if the Treasury could detail what issues they have actively sought outside input on, which sources they have consulted and how policies have changed in the light of these actions.

  Action: Summarise the view points of stakeholders outside the IMF decision making process and point to sources where alternative analysis and information can be obtained (such as websites).

  Action: Summarise what input has been sought from sources outside the Treasury, eg southern governments, academics, NGOs and the private sector, into discussions on key IMF issues and policy formulation processes.


  Many issues the Treasury is concerned with have an impact on developing countries. Thus it is essential that there is effective collaboration between DFID and the Foreign Office. It would be useful if the Treasury Report could include details of whether the Treasury or DFID, for example, is leading on a particular issue and how they are collaborating, particularly on deciding policies. For example, the Government's White Paper on globalisation calls for national road maps towards capital account liberalisation, but it is not clear whether DFID or the Treasury will be taking this work forward.

  The report should include a list of relevant reports, think-pieces, speeches by the minister and senior staff and policy documents and details of how they can be obtained. It would also be helpful if the report included references for key IMF policy papers, research findings, new research being undertaken etc, on the subjects discussed.

  Action: Demonstrate how the Treasury is collaborating with other government departments, such as DFID, to ensure consistency between departments on IMF issues.

  Action: Provide a summary of resources produced by the Treasury and other government departments on IMF activities and details of how to get hold of them.

17 January 2001

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