[stop-imf] New roles for IMF, WBank
Robert Weissman
rob@essential.org
Tue, 30 May 2000 10:46:28 -0400 (EDT)
Pressure from the Larry Summers, the US Congress and the streets seems to
have persuaded the IMF to accept a slimmed down role. And street heat may
be pushing the IMF and Bank to agree to provide more substantial debt
relief -- though it's a safe bet they are not yet ready to retreat from
structural adjustment conditionality.
Robert Weissman
Essential Information=09=09=09| Internet:=09rob@essential.org
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[Excerpted] Headlines for Tuesday, May 30, 2000:
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- WORLD BANK HEAD FORESEES CLEARER IMF, BANK ROLES.
- KOEHLER OUTLINES BLUEPRINT FOR IMF OVERHAUL.
WORLD BANK HEAD FORESEES CLEARER IMF, BANK ROLES.
The separate roles of the World Bank and the IMF should be much clearer
within a year, Reuters reports World Bank President James Wolfensohn said
Monday in The Hague. Speaking after meeting members of Parliament from
several European states, Wolfensohn said the World Bank would probably end
up focusing on development issues, leaving the IMF to concentrate on
fiscal and monetary policies. "I expect greater clarity in the next 12
months on what the IMF and what the World Bank do...There has been no
diminution in working together," he said.
His comments come less than a week after new IMF Managing Director Horst
K=F6hler said he would be looking for more tightly defined roles for the tw=
o
lenders, the story notes. K=F6hler also eased back from his predecessor's
policy of pushing the IMF towards poverty alleviation. Also reporting on
K=F6hler's remarks, the Australian Financial Review notes that the Fund and
the Bank are working closely together on plans to write off a large
portion of the developing world's debt.
Wolfensohn noted that the World Bank's chief concern was AIDS prevention,
adding that the Bank was likely to give $1 billion to AIDS-related
programs in addition to the $1 billion it has given indirectly so far,
Reuters continues. In India and Africa, he noted, the lethal disease was
spreading rapidly, and in some countries AIDS had reduced the life
expectancy by about 17 years.
"AIDS has moved from a health issue to a development issue," he said. "The
big question in Africa is less the funding...there's a lack of will (for
AIDS prevention) and organization." Noting that many African countries
have no proper health care system and face cultural barriers which prevent
them from alerting the population to the dangers of AIDS, the story says
the Bank has estimated about 32 million people are infected with the HIV
virus worldwide.
Het Financieele Dagblad (the Netherlands, 5/29, p.6), the Netherlands,
5/29, p.6), NRC Handelsblad (5/29, p.13), Troouw (5/29, p.4) and De
Volksrant (5/29, p.1) also report on Wolfensohn's remarks in The Hague.
Separately, a National Journal (US) profile-article notes that detractors
and supporters alike agree that the 66-year-old Wolfensohn, a native
Australian and former Wall Street investment banker, is the best Bank
president since the fabled Robert McNamara. Wolfensohn has a formidable
first-term track record. He sharpened the Bank's focus on alleviating
poverty, decentralized the institution, and improved coordination with
other international-development agencies.
But the Bank's refocusing is stymied by an internal contradiction that is,
in part, of Wolfensohn's own making. Responding to the needs of developing
countries, the Bank has shifted its lending priorities from steel-and-beam
infrastructure projects to social lending. Moreover, Wolfensohn has never
met a development challenge he didn't want to tackle. So at a time when
the Bank's underwriters-in Europe and the United States-are demanding cost
saving, staff cuts, and greater effectiveness, the institution is engaging
in activities that are more personnel-intensive and can have high failure
rates.
Wolfensohn can't rely solely upon his considerable personal magnetism if
the Bank is to cope with the challenges that lie ahead. Capitol Hill has
been relatively quiescent in the last year, but that lull may soon pass.
The congressionally appointed Meltzer Commission called this spring for
the Bank to make fewer loans and more grants-a revamping that could be the
start of greater legislative oversight. Further, the Bank's recent
decision to make a loan to Iran over U.S. objections may further fuel the
congressional fire. Most important, the Bank faces an inherent challenge.
It has long prospered on high-yield infrastructure projects. But as the
Bank increasingly shifts its loan portfolio to lower-yield social
projects, how does it stay in the black and in the good graces of its
donors, which are increasingly reluctant to offer new financial support?
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KOEHLER OUTLINES BLUEPRINT FOR IMF OVERHAUL. Horst Koehler, managing
director of the IMF, outlined his blueprint for reform of the Fund on
Tuesday and offered suggestions for an overhaul of the global financial
system, Dow Jones reports. Koehler made his comments in a speech to be
delivered to a meeting of the International Monetary Conference in Paris.
This is his first public speech since assuming the IMF's top job May 1.
Though closely resembling the reform manifesto put forward in the past six
months by US. Treasury Secretary Lawrence Summers, Koehler attempted to go
beyond the changes suggested by the US. In particular, Koehler said the
IMF is establishing a "Capital Markets Consultative Group" that is to
provide a meeting point for bankers, market participants and IMF
management.
He also called for the development of "broad principles that can be
applied to avoid the perception of uneven treatment of creditors and
countries" in times of economic crisis. Additionally, the new IMF boss
showed he agrees with previous suggestions - predominantly offered by the
U.S=BEto streamline the number of IMF loan facilities, differentiate the
roles of the Fund and the World Bank and ensure greater emphasis by the
multilateral lenders on preventing crises, rather than emergency bailouts
for stricken nations.
"It seems to me that we have to think about limits to the scale of
crisis-lending that the Fund can be expected to undertake," Koehler told
the conference. "At any rate, it becomes imperative that the Fund, and the
international community, pay the utmost attention to crisis prevention,
especially through sound macroeconomic policy, the promotion of
transparency and the implementation of practical standards and codes."
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