Memorandum submitted by Oxfam
INTRODUCTION
1. Oxfam welcomes the opportunity to feed
into the evidence session with the Rt Hon Gordon Brown MP, Chancellor
of the Exchequer and the Rt Hon Hilary Benn MP, Secretary of State
for International Development on the Autumn meetings of the IMF
and the World Bank.
2. At this year's Autumn meetings Oxfam
was looking for progress in two key areas: financing strong policies
to achieve the Millennium Development Goals, and improving the
representation of developing countries in IFI decision-making.
The meetings produced only very limited progress on these areas.
Our original recommendations for progress on these areas and the
corresponding outcomes from the meetings are detailed below. We
have also detailed how we intend to measure progress on these
areas in the near future.
FINANCING STRONG
POLICIES TO
ACHIEVE THE
MILLENNIUM DEVELOPMENT
GOALS
3. We agree with the UK and many other donors
that a major effort will be required from rich countries and poor
countries alike if the MDGs are to be met. At the moment there
continues to be a collective failure at a number of levels to
deliver on the MDGs, and not simply in terms of failing to meet
the commitments to increase aid made by rich countries at the
Financing For Development summit in Monterrey:
— Rich countries including the UK Government
have not made a serious financial commitment to the Education
for All Fast Track initiative (FTI), which we believe is critical
to helping deliver the education to MDGs.
— Rich countries and the International
Financial institutions have failed to address adequately the debt
crisis in developing countries. Deepening debt burdens are undermining
financing of policies to achieve the MDGs. In April, Bank and
Fund staff reported that 20 of the 26 countries that are receiving
debt relief under the HIPC initiative paid more than 10% of government
revenue to service their debts in 2002. Six of these paid more
than 20% of government revenue servicing their debts. Many governments
are spending more servicing their debts than they are on basic
education and health.
— The IMF has not yet translated rhetorical
commitment to the MDGs into practical action. In fact, by setting
unnecessarily tough fiscal targets and by restricting flows of
debt relief and aid, the IMF is undermining the ability of some
developing country governments to finance efforts to achieve the
MDGs.
4. Oxfam called on governments attending
the World Bank and IMF meetings to:
— Reiterate their pledge that no country
seriously committed to reaching the MDGs will fail for lack of
resources.
— Announce a time-bound commitment
to reach the level of 0.7% of GDP in aid—and we are calling
on all development and finance ministers to support the proposal
for an International Financing Facility to increase aid flows
in the short term.
— Insist on a full discussion of the
education Fast Track Initiative by the Development Committee,
and for the rapid expansion of Fast Track to other committed countries;
and announce additional medium-term financing for Fast Track countries.
We are concerned the UK's ongoing support for the Analytical Fast
Track is not sufficient to encourage real progress by all donors
to help developing countries reach the education MDGs.
— Demand increased debt relief to IDA
countries, and a new measure of debt sustainability that is linked
to the MDGs.
— Insist on a commitment from the IMF
to greater fiscal flexibility (the IMF should be mandated to discuss
more than one macroeconomic scenario with country authorities),
and an end to the dominant role of the IMF as gatekeeper for debt
relief and aid.
5. At the meetings, there were a number
of important steps forward. The Dutch Government pledged an additional
2.5 billion euro over five years for education. The Development
Committee also requested a progress report on FTI at the Spring
meetings in April 2004. The communiqué said, "we stressed
the need for accelerating progress and results on service delivery
MDGs, including through EFA FTI. We asked the Bank to report on
progress on funding and lessons from the implementation of the
FTI at our next meeting."
6. The UK Government, in its statement to
the Development Committee, declared: "The UK Government is
committed to making the education Fast Track Initiative (FTI)
work. The revised framework emphasises the importance of national
sector plans set within the framework of national poverty reduction
strategies We will work within this revised FTI framework to fill
education finance gaps, and we plan to increase spending on education
to over £1 billion over the next five years. We will support
bilaterally through our country programmes, as well as multilaterally
through the International Development Association (IDA) and the
European Community (EC)". We regard this as a major step
forward and hope that this will translate into renewed political
and financial support on the part of the UK Government for the
FTI in the near future.
7. The World Bank has agreed to produce
a report on ways to finance the MDGs, including the IFF, for discussion
by the Development Committee at the Spring meetings. This is a
very welcome step forward, and we hope this will build on the
tireless efforts of UK Government (particularly the Chancellor)
to encourage all donors to produce significantly more financing
in order to help reach the MDGs. We see the on-going work of all
the international institutions as important to delivering the
MDGs, and in particular the G8 2005 as a critical opportunity
to secure more political and financial support from key donors.
8. Development Committee Communiqué
asks the "Bank and Fund to respond to requests for assistance
from countries undertaking PSIA (Poverty and Social Impact Analysis)
and developing alternative scenarios to meet the MDGs, where appropriate."
This is a welcome step forward in developing PSIA work as Oxfam
has been calling for a number of years for the Bank and Fund to
examine controversial policy reforms to enable a proper discussion
of their impact on poverty before they are undertaken. We would
like to see the Bank and Fund develop minimum standards on the
process for carrying out such PSIA work in a way that encourages
country governments and civil society to be involved, an clearly
links to their PRSPs. We are still awaiting clarity on how the
Bank and Fund divide their responsibilities for delivering PSIA
work.
9. Oxfam's paper, "The IMF and the
Millennium Development Goals: Failing to Deliver for Low Income
Countries", was given a good reception by Executive Directors
and Bank and Fund staff, provoking much thought within the IMF
and now leading to further discussion with staff from both institutions.
The IMF is now conducting a review on its work in Low Income Countries
and plans to report back to its board early next year.
10. The IMFC communiqué says, "Fund
should work in its core areas of competence alongside the Bank
in support of the MDGs. The IMF needs to remain engaged with low
income countries over the long term through well-targeted technical
assistance, capacity building, surveillance, and, when warranted,
temporary financial assistance. The Committee looks forward to
reviewing Bank-Fund collaboration at its next meeting."
11. The IMFC communiqué also says:
"the Committee emphasises the importance of initiative to
enhance the IMFs support for low income countries, including ensuring
that macroeconomic policy frameworks support higher and sustained
growth and poverty reduction; improving governance and strengthening
institutions to support growth and private sector development;
reducing vulnerability to shocks; and helping countries move beyond
sustained reliance on IMF financial arrangements when ready. The
Committee underscores the importance of technical assistance,
and looks forward to work on adapting IMF instruments and reviewing
PRGF financing. The Committee looks forward to a comprehensive
review of progress at its next meeting".
12. Disappointingly, despite NGO pressure
(including a joint report from Oxfam, Christian Aid, CAFOD, EURODAD
and Jubilee Research) there was almost no progress made on HIPC.
The Bank and Fund have simply agreed to review debt sustainability
at the next meeting and encourage more work on shocks. We would
like to see the Bank and Fund and key donors such as the UK, manage
to keep debt relief and HIPC on the international agenda, and
in particular make progress on linking debt relief to achieving
the MDGs.
VOICE AND
REPRESENTATION OF
DEVELOPING COUNTRIES
13. Oxfam was concerned the proposals drawn
up ahead of the meetings to improve the voice and representation
of developing countries at the World Bank and IMF were extremely
weak. It seemed unclear whether even the absolute minimum step
of increasing the number of African Executive Directors would
be achieved.
14. We welcomed the UK Government's commitment
to improving the voice and representation of developing countries
at the IFIs. We asked the UK to press for a new governance structure
that reflects both the importance of these institutions for Developing
Countries and the global balance of power of the early twenty
first century rather than the middle of the twentieth century.
New criteria for distributing seats and voting shares should be
developed. These could include the level of engagement of the
IFIs in a country, population size, size of economy, and some
measure of the commitment of a country to development (credit
could be given for high levels of aid for example). It is also
unacceptable to have a combined total of two women (compared to
46 men) on the boards of the IMF and World Bank. A less archaic
approach is needed to the appointment of the Managing Director
of the IMF and the Director of the World Bank. Steps are also
needed to improve transparency and information disclosure.
15. Oxfam urged governments attending the
World Bank and IMF meetings to:
— Demand improvements in board composition
and voting power. No constituency should be larger than 10 countries.
As an absolute minimum step the number of African Executive Directors
should be increased.
— Support a fair and efficient process
for selecting the IMF Managing Director and World Bank President
with an open nominations process, and appointments being based
on merit.
— Insist on greater transparency and
information disclosure, including early publication of the full
agenda and minutes of World Bank and IMF Board Meetings.
16. At the meetings, little progress was
made. A trust fund was established to help fund extra staff for
the offices of developing country Executive Directors, and there
was a declaration to improve borrower participation in IDA negotiations.
The Development Committee asked for a report on progress at the
Annual Meetings in 2004; this request at least keeps this issue
on the table, which is very important, but little substantive
change was achieved at these meetings.
TRADE
17. Inevitably, discussions at the Annual
Meetings included reflections on the outcomes of Cancun. The World
Bank and IMF have been asked to prepare a report for Ministers
on the critical importance of the development agenda in the current
round and the need to resume talks as soon as possible. We see
this as a welcome development, and are pressing to ensure such
a report includes an examination of the IFI's role in the formulation
of developing countries' trade policies. Bank and Fund staff are
also looking at how best to develop the capacity of developing
countries to help them take advantage of new trade opportunities.
Again, Oxfam welcomes this initiative but cautions that it would
be important to ensure such work also examines the IFI's role
in the formulation of developing countries' trade policies.
CONCLUSION
The UK Government continues to play a key role
in championing the concerns of developing countries within the
IFIs. Oxfam considers it essential, as part of this work, to continue
to press the IFIs strongly to make progress on all the issues
outlined above. In particular to go further in pressing for further
debt relief, trade policy reform and improvements in voice and
representation for developing countries at the IFIs.
We will measure progress on World Bank and IMF
issues between now and the spring meetings next April on:
— The amount of political and financial
support the UK Government gives to the education FTI.
— Whether the Spring World Bank report
on ways to finance the MDGs, including the IFF, encourages all
donors to increase financing in order to help reach the MDGs.
— How the Bank and Fund respond to
requests for assistance from countries undertaking PSIA and developing
alternative scenarios to meet the MDGs. Whether the Bank and Fund
clarify how the institutions divide their responsibilities for
delivering PSIA work.
— The extent to which the IMF review
of its work in Low Income Countries takes account of the issues
outlined in our policy paper, "The IMF and the Millennium
Development Goals: Failing to Deliver for Low Income Countries".
This should include examining greater fiscal flexibility, and
macroeconomic scenarios based on PSIA work.
— The Bank and Fund developing minimum
standards on the process carrying out such PSIA work in a way
that encourages country governments and civil society to be involved,
and clearly links to their PRSP.
— Whether the Bank and Fund, and key
donors such as the UK, manage to keep debt relief and HIPC on
the international agenda, and in particular make progress on linking
debt relief to achieving the MDGs by revising the way in which
debt sustainability is calculated.
— Whether the Bank and Fund review
of how best to develop the capacity of developing countries to
help them take advantage of new trade opportunities examines the
IFI's role in the formulation of developing countries' trade policies.
The review should also address the fundamental issue of failing
commodity markets, and rich countries' agricultural dumping policies.
October 2003
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