Select Committee on Treasury Written Evidence

Memorandum from The One World Trust


  The One World Trust believes that the IMF needs to balance and strengthen its accountability to its key stakeholders. In particular, the Fund is currently not sufficiently accountable to citizens whose lives may be adversely affected by the IMF's lending decisions. The submission identifies three obstacles to a more accountable IMF: power imbalances among members, shortcomings in democratic oversight, and a lack of transparency. The submission also suggests ways in which the organisation can work to overcome these obstacles.

  2.  The One World Trust promotes education and research into the changes required within global organisations in order to achieve the eradication of poverty, injustice and war. It conducts research on practical ways to make global organisations more responsive to the people they affect, and on how the rule of law can be applied equally to all. It educates political leaders and opinion-formers about the findings of its research. Its guiding vision is a world where all peoples live in peace and security and have equal access to opportunity and participation.

  3.  Increasing the accountability of Intergovernmental Organisations (IGOs) is central to the work of the One World Trust. Our recent publication Pathways to Accountability: The GAP Framework, [48]provides a baseline for what is important if organisations are to improve their accountability to stakeholders. While many IGOs, such as the IMF, assume a number of important functions in the conduct of global affairs and have the authority to make decisions that impact on the lives of billions of world citizens, the existing mechanisms for ensuring the accountability of these organisations to the full range of their stakeholders are not sufficient.

  4.  The IMF should seek to balance its accountability relationships with three important overlapping stakeholder groups: member states, national legislators, and affected citizens. With its current governance arrangement, the IMF's accountability is heavily skewed towards those member states that provide the vast majority of its financial resources. As a result, the interests of many affected citizens are not sufficiently taken into account in the IMF's decision-making procedures. We believe that the IMF's accountability to those citizens that experience the consequences of its actions needs to be strengthened. This is only possible if:

    (i)  the IMF balances its internal accountability to member states;

    (ii)  the IMF strengthens its accountability to national legislators; and

    (iii)  the IMF becomes more accountable to the public at large, allowing affected citizens to engage in an informed debate about the IMF's activities at both the national level and with the IMF directly.

  5.  There a number of reasons why the interests of affected citizens are not sufficiently represented at the IMF's decision-making level. This submission will focus on the three most pressing:

    (i)  the power imbalances that exist between member states (as reflected in the current voting arrangements) at the IMF which result in inequitable representation in key decision making bodies;

    (ii)  the disconnect between constituencies, elected representative and foreign policy decision-making in the context of the IMF; and

    (iii)  the continued lack of transparency within the IMF, in particular with respect to its principal decision-making body, the executive board.

  6.  In terms of internal member control, there are severe shortcomings apparent in the governance structure of the IMF. These deficits are the result of the existing power imbalance within the organisation which prevents many developing countries from having a sufficient amount of voice or influence in the IMF's decision-making processes. Besides perpetuating existing inequalities at the global level, this situation also undermines the IMF's capacity to serve the purpose for which it was established. Countries of the South that lack a sense of ownership of important decisions made by the organisation, are likely to regard these decisions as lacking legitimacy and will be reluctant to give them their full support and uphold them within their own countries.

  7.  In the Trust's opinion, progress towards achieving a more equitable decision-making structure at the IMF could be made through the extension of a double-majority voting system as already applied by the IMF to alter the Articles of Agreement and for general decision-making by another international financial institution, the Global Environment Facility. Ngaire Woods points out that "the effect of a double-majority voting rule applied to a wider range of decisions would be to ensure that the Board's consensus reflected not only a majority of voting power but also the support of a majority (or set percentage) of members of the organisation." [49]As a result, one important element of accountability—balanced internal member control—would be considerably strengthened.

  8.  In addition to member states being in a position to make balanced accountability demands on the IMF, the One World Trust's work also highlights the importance of allowing the citizens of these member states to hold IGOs accountable through their elected representatives, particularly in the national legislature. For this to be effective a number of conditions must be met:

    (i)  legislators require clear, contextualised and timely information from the IMF;

    (ii)  the recognition and support of the right of parliaments to determine national economic policy; and

    (iii)  the opportunity for national legislatures to question IMF officials directly.

The International parliamentarians' petition for greater democratic oversight of the World Bank and IMF' has had a huge success in the UK parliament with over 280 current MPs and Peers from all parties supporting the principle of national control of economic policies. [50]

  9.  An important requirement for greater accountability to all three stakeholder groups—member states, national legislators and affected citizens—is that these stakeholders are able to access relevant and timely information about the Fund. Although the IMF needs to be commended for the progress made in recent years in addressing issues of its transparency, the continued lack of openness in relation to the executive board raises significant cause for concern. A lack of meaningful transparency within this principal decision-making body is a major impediment to greater accountability. It reinforces the existing inequalities among member states (through disadvantaging those members that have fewer resources available to gather knowledge and expertise about the IMF), makes it harder for legislators to improve democratic oversight of the Fund, and for affected citizens demanding greater accountability of their elected representative for their actions at the IMF or lobbying the Fund directly.

  10.  Although releasing summaries of board discussions and a calendar of board meetings are useful they do not go far enough. Without a clear record of the proceedings and formal votes of the Executive Board, citizens and parliamentarians are unable to hold their national representatives to account. For this reason the Trust emphasises the need for the minutes and voting record of executive board of directors meetings to be disclosed. These should be made available on the IMF's website and should be disclosed in a timely manner.

January 2006

48   Monica Blagescu, Lucy de Las Casas, Robert Lloyd (2005). Pathways to Accountability: the GAP Framework. London: One World Trust. Back

49   Ngaire Woods. A note on decision-making reform in the IMF. Paper prepared for the G24 Technical Meeting in Manila, March 2005. Back

50   For more information see Back

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