Select Committee on Treasury Minutes of Evidence

Examination of Witnesses(Questions 140-141)




  140. Do you share the concern that the World Bank can only lend to other governments? In other words, government to government relationships. Here we have the social element in the country, the need to ensure that we are responsive, and it is a government to government element.
  (Professor Miller) On that point, there is a recent study by Nancy Birdsall and John Williamson referred to in my submission on delivering on debt relief, and they made the point that if governments are not reliable or are unable to manage resources well, the money would not go through the IDA via governments but should be financed and managed by United Nations specialist agencies, and also work with the NGOs. So if the government is not reliable, one should send it on somewhere else.

  141. What should be the number one issue in Mr Ko­hler's in-tray?
  (Mr Wilks) He needs to get a grip on the legitimacy crisis that the IMF faces with many key constituencies. This is the root. The legitimacy is a function of governance and how its activities day to day are perceived by many people. At the root of many of the specific instances of the IMF causing problems in the real world and on the ground is the fact that it is inadequately governed; it is becoming more transparent but it is not transparent enough for everybody; and it is still claiming to do more things than it can actually deliver. I think the crisis over legitimacy should be at the top of his list.
  (Mr Wallis) From us, clearly poverty reduction, and really getting serious about the Fund's effects on poverty reduction, which means getting out of liberalisation conditionality and understanding the effects of what it calls for on public spending.
  (Professor Vines) Dealing with sovereign debt crises. A Fund which plays its role in helping to solve both of the two problems described but has not solved the issue of how to deal with Brazil and how to deal with others in Argentina's position is leaving the world without the protection that only it can give the world, and to have not enough to say about Brazil is his major in-tray issue.
  (Professor Miller) As David Vines says, perhaps getting more clarity on the issue of whether to have the US Treasury's approach followed or whether to go down what the IMF itself has put forward would be very helpful.

  Chairman: Can I thank you very much for your attendance. It was fascinating and has given us an awful lot of meat for our session next week.

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Prepared 12 December 2002