Source:
InterAction.org
Spring Meetings Update
World Bank-Civil Society Initiative
Division on Development Policy and Practice
InterAction
April 2004
This update, drawing loosely on existing documents and sources, sets out for InterAction members and others a summary of some key issues to follow in the upcoming Spring Meetings.
In this update:
1. Official Spring Meetings Agenda
2. Civil Society Events Overview
3. Issues and Themes
a. Global Monitoring Report on the MDGs and the “Managing for Development Results” framework
b. IDA-14
c. Education for All Fast Track Initiative
d. Debt sustainability
e. Voice and Vote of developing countries on the World Bank and IMF Boards
f. Extractive Industries Review
g. World Bank and Trade Liberalization
1) Official Spring Meetings Agenda
The official agenda of the Development Committee for this year’s Spring Meetings appears to be slimmer than in the past. The provisional agenda includes discussions of a new framework of long-term debt sustainability and the Global Monitoring Report on the Millennium Development Goals (MDGs) with a special focus on the Education for All Fast Track Initiative (FTI). For more information of each topic, please see the issues and themes described at length below. The broader tentative schedule of events is also available.
2) Civil Society Events Overview
On the occasion of the Meetings, the World Bank and the IMF are organizing a number of dialogues with civil society organizations. A number of colleagues from European, African, Asian, and Latin American civil society organizations will attend these. The list of seminar topics includes the issues raised at the official meetings themselves as well as other issues of importance, many of which are mentioned below. InterAction is encouraging members to attend these. In addition to the dialogues with the IFIs, there are also a variety of other civil society events on a wider array of topics.
3) Issues and Themes
A. Global Monitoring Report on the MDGs and the “Managing for Development Results” framework
The International Conference on Financing for Development in Monterrey was a significant convergence of development actors. The conference gave rise to the notion that better coordination, engagement, and prioritization of development are necessary. In a joint statement on development effectiveness, international institutions committed to measuring, monitoring, and managing for development results. The statement calls for developed countries to provide more relevant and effective support through improved trade and aid policies and for developing countries to strengthen their commitment to policies and actions that reduce poverty and stimulate economic growth. It demands better measuring, monitoring and managing for results.
To advance on this "Managing for Development Results" mandate, two global roundtables were since held on the subject. The second Global Roundtable took place recently in Marrakech, Morocco with the participation of multilateral development banks (MDBs) and the Development Assistance Committee of the OECD. The second Roundtable brought together those from both development agencies and developing countries to continue elaborating upon the managing for development results work. Participants assessed progress from the first Global Roundtable that took place in Washington, D.C. in mid-2002, and discussed better monitoring and evaluation of country-level development policy. Again, the issues discussed included better donor coordination and capacity building of borrower countries.
In accordance with that mandate, this year the first Global Monitoring Report on the MDGs was produced in time for the Spring Meetings. The report considers whether we are on track to reach the goals or not, and concludes that we are in fact off track to reach all the MDGs, with the exception of the poverty goal, and even that one is only likely to be reached as a global average (thanks largely to India and China). Most Sub-Saharan African countries are projected to fall short. The report again stresses the respective roles of developing countries, developed countries, and international financial institutions to keep the process moving forward. A second report considers financing modalities that can help us get to the MDGs.
As part of the global focus on results management that is reinforced by the IDA-13 replenishment arrangement, InterAction has requested a dialogue to discuss findings of the "Global Monitoring Report 2004. Policies and Actions for Achieving the MDGs", that will be discussed by the Development Committee during the Spring Meetings. This discussion will also include the Bank's work on monitoring and evaluation, and specifically on the "Managing for Development Results" mandate and a report-back on the second Roundtable in Marrakech.
B. IDA-14
The IDA-14 replenishment, as a whole, is likely the most important discussion topic for InterAction members in the upcoming months. Negotiations are taking place throughout 2004 on the 14th replenishment of the International Development Association (IDA), the concessional lending arm of the WB. Indications from US Treasury, shared in a meeting with NGOs early this year, are that the US government will request an increase in the proportion allotted as grants, possibly up to 40 percent. Civil society will support increased replenishment overall, as long as it is conditioned on reforms to increase transparency and accountability. Specifically, these reforms are spelled out in legislation set out in the FY 2004 Consolidated Appropriations Act, establishing US government policy benchmarks in MDB openness and accountability. These benchmarks include:
- greater openness and information disclosure, ranging from project preparation documents to Board discussion.
- The requirement that any health, education, or poverty-focused loan or policy include specific outcome and output indicators to measure results.
C. Education for All Fast Track Initiative
The Education For All FTI is a plan for those countries that have adequate education policies but that cannot achieve the relevant MDG without outside financial support. FTI countries, such as Albania, Ethiopia, Nicaragua, and Vietnam have a poverty reduction plan developed with the World Bank and IMF that includes a specific education strategy that is then funded by international donors. Since its launch in June 2002 it appears that satisfactory progress has been made with respect to formulation of a framework for discussing education policy, maintaining political momentum, sharing lessons learned, and comparing outcomes. Yet, the progress on the Initiative has also illustrated the challenges of advancing the overall MDG agenda, the biggest of which relates to financing. The WB has voiced that present funding levels are too low and considerably unpredictable to support sustainable educational programs. It appears that the targets are unlikely to be met in time unless there is a substantial improvement in international commitment. Given these mixed indicators, over the course of the Spring Meetings the Development Committee will consider policy alternatives for all parties involved, from greater alternative funding and enhanced coordination on the part of the donors, to a better results management system at the WB and the IMF, to policy reform in the recipient countries including promoting private sector development and a liberalized investment climate.
D. Debt sustainability
The Development Committee will consider a paper that analyzes the debt sustainability position of countries even in the context of the application of HIPC. This analysis stems from the understanding that LICs cannot pursue adequate development policies while at the same time ensuring that their external debt remains sustainable. The aim is to produce a framework that would guide borrowing and lending in a way that matches their ability to service that debt. This would be a future-oriented mechanism different from the HIPC initiative, which deals with excessive debt that has already accumulated in the past. The Bank and IMF’s framework would be based on debt burden thresholds that are related to the country’s particular situation. The framework also considers the impact of exogenous shocks for such countries. This framework would then provide an informed basis for the design of an appropriate borrowing/lending in a way that would facilitate progress toward the (MDGs). It would inevitably imply a greater amount of concessional financing and would ideally provide a number of safeguards for unforeseen shocks. There is also an implication that borrowers would have to implement policies to manage their debt burden, though at the moment what this means remains unclear. While a specific proposal is not yet on the table, the Spring Meetings will serve as a forum to continue developing such a framework.
E. Voice and Vote of developing countries on the World Bank and IMF Boards
The departure of Horst Koehler as the IMF’s Managing Director has thrown the spotlight on the leadership selection process of the Bank and the Fund. Currently as the main financial contributors to the WB and the IMF, rich countries have a disproportionate control over these institutions. It is often pointed out that while the US, Japan, Germany, France, and the UK each have their own representative on the Board, all 47 Sub-Saharan African members are represented by only two executive directors. This governance structure has ensured that up to now nationality rather than merit determined the leadership of these institutions. Traditionally, a European has headed the IMF while an American has directed the World Bank. The IMF faced similar criticism in 2000 upon the resignation of Michel Camdessus and the appointment of Köhler. At the time, the IMF committed to reform, but so far it has neglected the concerns of developing countries. Already many declarations of concern have been made by developing country Executive Directors to the IMF, African Finance Ministers, and European non-governmental organizations. The situation remains fluid with a number of Latin American Executive Directors backing the European frontrunner, Spain's outgoing finance minister Rodrigo Rato, and a number of other developing country Executive Directors backing three other candidates.
At the Spring Meetings, attention will again be focused on the need to give a greater voice to developing country governments by various means. The debate ought to include the questions of restructuring the voting share on the Executive Board and reallocating the number of seats. Meanwhile, civil society campaigners and Southern government officials alike will again be pressing for a more open, transparent, and democratic selection process.
F. Extractive Industries Review
Three years ago James Wolfensohn decided to commission an independent review of Bank lending in oil, gas and mining industries in light of the Bank’s overall mission of poverty reduction and the promotion of sustainable development. Consequently, the Extractive Industries Review (EIR) was independently conducted under the leadership of Emil Salim, former Minister of the Environment of Indonesia, in a participatory manner that engaged all stakeholders. The aim was to produce a set of recommendations that will guide the World Bank Group’s lending in the extractive sector in the future.
The basic question addressed throughout this process was, Can extractive industries projects be compatible with the World Bank’s goals of sustainable development and poverty reduction? Based on the two years of research and consultations, the EIR’s answer is a qualified yes, there is a role for World Bank in the oil, gas, and mining sectors, but only if its interventions allow extractive industries to contribute to poverty alleviation through sustainable development. This can only happen under the right conditions such as:
o Pro-poor public and corporate governance, including proactive planning and management to maximize poverty alleviation through sustainable development;
o Much more effective social and environmental policies; and
o Respect for human rights
The EIR culminated with specific recommendations published in the Final Report in December 2003, which will be considered by the Bank’s Executive Board at some time in June or July. There is broad consensus across civil society organizations that the Review has produced a very forward-thinking report that will challenge the World Bank Group to increase their positive impacts on poverty reduction and sustainable development. The Review recommends, among other things, that the following pre-conditions are in place before the Bank undertakes lending for extractive industries: free, prior, and informed consent on the part of the affected communities; adoption by the Bank of human rights and core labor standards; governance reform efforts so that poor people benefit from increased government revenues from extractive industries. The Review also recommends that the Bank phase out lending for oil projects by 2008. A number of letters to the Bank, including one signed by a group of Nobel Laureates, have urged adoption of the Review’s recommendations. As the WB starts considering the final conclusions of the report, civil society campaignerswill be at the meetings to encourage it to adopt the recommendations.
G. World Bank and Trade Liberalization
As the Bretton Woods Institutions have stepped up their trade policy lending over the years, development NGOs are turning their eyes to this issue as well. The common notion that trade liberalization has a positive impact on growth and development has been increasingly been questioned as negative social, gender and environmental impacts have been repeatedly documented. Meanwhile, by way of an official declaration on coherence the World Bank, IMF and the WTO have continued to pursue trade liberalization in concert. This year NGOs (such as the Center of Concern and others) will be meeting again to discuss how policy coherence between trade and financial institutions affects sustainable development and local democratic policy choices. For more information on trade please see http://www.interaction.org/trade.
Thank you and happy Spring Meetings from InterAction’s
World Bank-Civil Society Initiative.
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