[stop-imf] ActionAid: Stop careless IMF food advice for poor, Brown urged

Fri, 12 Jul 2002 16:12:45 -0700

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> 3 July 2002
>
> Stop ëcarelessí IMF food advice for poor, Brown urged
>
> Chancellor Gordon Brown is today urged to use his role
> as chair of the governing board of the International
> Monetary Fund to prevent a repeat of the ìcarelessî
> advice which is alleged to have worsened the food
> crisis in Malawi. The plea comes as the IMFís chief
> prepares to face questions from UK politicians on the
> relationship between the Fund and Britain. Horst
> Kohler, the IMF managing director, will be quizzed
> tomorrow (4 July) by members of parliament on the
> Treasury select committee. This is the first time a
> managing director of the fund will appear before a
> British select committee.
>
> ActionAid calls on the MPs to press Mr Brown to limit
> the influence of the Fund in the crucial area of food
> security. In a memorandum (below) to the committee,
> the international development charity stresses the
> Fund lacks the expertise to instruct poor countries on
> decisions which affect food supplies.
>
> ActionAid declares the IMF must reform after criticism
> that the Fund told the Malawian government to sell its
> emergency grain reserves to repay a £9 million debt.
> ActionAid is calling for the Treasury to:
> ·limit the overall role of the IMF in food security
> issues by ending inappropriate loan conditions.
> ·where the Fund is giving advice with implications
> for food ? in agriculture, for example - ensure that
> potential impacts on poverty and vulnerability to
> problems such as drought are identified. IMF guidance
> on food emergencies should be accompanied by a ìhealth
> warningî on the risk to food security
> ·in the case of Malawi, require the Fund and the
> World Bank to launch a closer study of the new poverty
> reduction strategy, in relation to how food security
> and farm production amid famine is being handled
> ·seek a report from the IMF and the World Bank on any
> potential links between agricultural reforms under
> Fund or Bank loans and the regionís looming food
> crisis.
>
> Over seven million of Malawiís 11 million people are
> acutely short of food, according to the countryís
> official sources. Already this year, up to 1,000
> people have died from hunger and hunger-related
> diseases in southern and central Malawi. Its
> government and aid agencies warn of disaster if more
> food does not reaxh the poorest soon.
>
> ActionAid says these are Malawiís first recorded
> famine deaths since 1949. The crisis represents policy
> failure in food security not just for global
> institutions, but also for Mr Brown, who recently laid
> out the aim of ìcredible strategies for food securityî
> and described the need for action on hunger as
> ìimperativeî. The submission says the IMF advised the
> Malawian government to make cuts in reserves from
> 165,000 tonnes to between 30,000 and 60,000 tonnes.
> After the government sold off almost all the reserve,
> the next harvest, forecast to be adequate, slumped
> amid drought, late rains and floods. In February the
> IMF delayed US$47 million in aid, despite the crisis
> and hundreds of starvation deaths. Private traders
> profiteered from the sale of the grain reserve, buying
> cheap maize, which was then hoarded until prices rose,
> before reselling for exorbitant prices. But the IMF
> pressed for the privatisation of the grain board
> without plans to combat risks from corruption.
>
> Matthew Lockwood, ActionAidís head of advocacy, said:
> ìThe IMF says its policy advice benefits poor people
> by producing sound economic policies and responsible
> public spending. But careless advice to Malawi, in a
> policy area where the Fund has little competence,
> deepened the food crisis for one of the worldís
> poorest countries. The Chancellor must assert his
> authority with the Fund to ensure that future guidance
> is responsible, reflects the IMF mandate and is based
> on sound assessment of its effects on vulnerable
> people.î
>
> End
> Contact: Paul Collins 020 7561 7614. ActionAid out of
> hours media number: 077539 73486.
> Note to editors
> Horst Kohler will be questioned by the Treasury select
> committee at 10 am on Thursday (4 July) in committee
> room 15 at the House of Commons. Mr Kohler will give
> evidence to the committee after the Treasuryís report
> Responding to the Challenges of Globalisation ? The UK
> and the IMF 2001. Chancellor Gordon Brown chairs the
> International Monetary and Financial Committee, the
> key committee of the IMFís board of governors and the
> main forum for discussing the Fundís policies at
> ministerial level.
>
> Memorandum from ActionAid to the Treasury Select
> Committee for the hearing with Mr Horst Kohler,
> Managing Director of the IMF.
>
> 1. The role of IMF in food crisis, with special
> reference to the case of Malawi.
>
> Summary of recommendations for all PRGF countries:
>
> ActionAid requests the UK Treasury Select Committee to
> seek a commitment that the Treasury will press for the
> IMF to institute, in collaboration with other domestic
> and international partners, a poverty and social
> impact assessment of all fiscal and institutional
> advice to Governments prior to the adoption of reform
> measures in the agricultural sector.  The adoption of
> IMF advice on the management of emergency food
> security mechanisms (such as strategic grain reserves)
> should specifically be preceded by a food security
> impact assessment.
>
> ActionAid also recommends that the Select Committee
> ask Mr Kohler for such a commitment.
>
> With regard to the specific case of Malawi, the UK
> Treasury Select Committee should press the Treasury to
> seek assurance from the IMF and World Bank that the
> recently approved Poverty Reduction Strategy
> discussion in July will be subjected to a closer
> examination of the treatment of food security and
> agricultural production in the light of famine.
>
> With regard to the wider food crisis in Southern
> Africa, the Committee should ask the Treasury to seek
> a report from the IMF on the relationship between
> reforms in the agricultural sector associated with IMF
> lending, and the ability of governments in the region
> to respond to the impending famine.
>
> Between January and April 2002, at least 500 - 1,000
> people died of hunger and hunger-related diseases in
> southern and central Malawi. Malawi has suffered from
> a number of agricultural crises over the years,
> including a major drought in the early 1990s, but
> these are the first recorded famine deaths in Malawi
> since 1949. ActionAid regards these deaths as a major
> failure, by state and non-state parties, to realise
> the rights of Malawians to food, inter alia under
> Article 25 (1) of the Universal Declaration of Human
> Rights.
>
> The events in Malawi also represent a failure from the
> point of view of UK Treasury policy in the area of
> food security, on which the Chancellor (in his recent
> speech to the UN Special Session on Children) said
> that action is ìimperativeî. After pledging a response
> to food crisis in Southern Africa in this speech, the
> Chancellor went on to specify the aim of developing
> ìcredible strategies for food securityî.
>
> ActionAid Malawi has close to twelve years of fighting
> poverty in several of the affected Malawian districts.
> With the Malawian Economic Justice Network and the
> Catholic Commission, ActionAid Malawi attempted to
> raise the impending famine as far back as November
> 2001, three months prior to the state of disaster
> statement by the Head of State of Malawi.
>
> There are both long term and immediate causes of the
> crisis, but policy failure plays a large role. A
> number of organisations have criticised the role of
> the IMF prior to and during the crisis.  The criticism
> has largely been of the IMFís involvement in three
> sets of policy advice namely, the adoption of an
> unsustainable cost-recovery strategy for the National
> Food Reserve Agency and subsequent running down of the
> grain reserves, the lifting of price control
> mechanisms and lastly, scaling back of essential
> inputs to small-scale agricultural producers.
>
> On June 13th 2002, ActionAid released an independent
> comprehensive report commissioned by ActionAid Malawi
> and conducted by a team of researchers from Malawi and
> the Institute for Development Studies in the UK
> entitled ìState of Disaster: Causes, Consequences and
> Policy Lessons from Malawiî. This report and
> subsequent communications with Alfred Kammer, Chief of
> the IMF Mission for Malawi in Washington DC
> establishes the following:
>
> ·In 2000, the IMF advised the government of Malawi to
> reduce the strategic grain reserve (SGR) from 165,000
> tonnes to between 30,000 and 60,000 tonnes, on
> cost-effectiveness grounds. The government
> subsequently sold off virtually all the reserve by
> mid-2001. There was to be replenishment of the
> reserves through local purchases after the 2001
> harvest, which was forecast to be adequate. In the
> event this was not so. The IMF does admit that the
> policy advice it gave to government in 2001 was based
> on ìwrong informationî about crop production. Other
> donors are implicated in the production of this
> incorrect information.
>
> ·Despite acute crisis and hundreds of starvation
> deaths in January-February, an IMF Mission in February
> 2002 did not immediately release of a disbursement of
> US$47 million, but ìreached agreement with government
> on the way forward to resume disbursements later in
> the yearî.
>
> ·In the May 2002 Article IV consultations, while
> acknowledging the need for ìurgent action to prevent
> starvationî the Fund Mission report implied that
> National Food Reserve Agency (NFRA) and Agricultural
> Development and Marketing Corporation (ADMARC)
> activities to minimise famine mortality were
> unjustified and ëunproductiveí thus, ìthe parastatal
> sector will continue to pose risks to the successful
> implementation of the 2002/03 budget. Government
> interventions in the food and other agricultural
> markets ultimately led to the National Food Reserve
> Agency (NFRA) and the Agricultural Development and
> Marketing Corporation (ADMARC) taking heavy recourse
> to budgetary financing, crowding out more productive
> spending.î (International Monetary Fund, Malawi ? 2002
> Article IV Consultation: Concluding Statement of the
> IMF Mission, IMF, Washington DC, 14 May 2002).
>
> ActionAid does not believe that the IMF directly
> caused the famine in Malawi. However, the crisis and
> loss of lives reflects policy failure and a violation
> of the most basic of human rights, the right to
> adequate, nutritious, safe and culturally acceptable
> food. Consequently, ActionAid strongly urges the UK
> Treasury Select Committee to examine the following
> short- and long-term issues relating to the IMFís role
> in countries undergoing acute food security programmes
> and implementing PRGF loans:
>
> ·The legitimate basis for IMF policy advice in any
> sector lies in budgetary and macro-economic factors.
> However, other factors also count, and should be
> considered before any policy advice is given and
> policy change made. In most low-income countries,
> policy in the food-producing sector almost always has
> major food security implications. As it has stated,
> the IMF has no competence on food security issues and
> does not provide funds for food aid. It would not be
> able to assess the potential impact of policy change
> in the agricultural sector on food security on its
> own.
>
> ·Consequently ActionAid recommends that the IMF
> institute, in collaboration with other domestic and
> international partners, a poverty and social impact
> assessment of all fiscal and institutional advice to
> the Government prior to the adoption of structural
> reform measures in the agricultural sector.  The
> adoption of IMF advice on the management of emergency
> food security mechanisms (such as strategic grain
> reserves) should specifically be preceded by a food
> security impact assessment.
>
> ·In the case of Malawi, it is clear that while the
> IMF gave undue weight to fiscal discipline and pressed
> for the privatisation of parastatals without a risk
> management strategy for corruption and profiteering by
> traders. The combination of these two led to a
> depleted capacity of the state to respond using
> domestic resources and the inflation by 400% of
> essential foodstuffs. ActionAid finds it
> incomprehensible that budgetary rectitude and
> macro-economic stability came at the cost of the death
> by starvation of over 1000 Malawian men, women and
> children.
>
> ·In order to ensure that this kind of tragedy is not
> repeated, ActionAid would seek assurances from the IMF
> (and the World Bank) that the recently approved
> Poverty Reduction Strategy discussion in July will be
> subjected to a closer examination of the treatment of
> food security and agricultural production in the light
> of famine.
>
> ·With regards to the wider food crisis in Southern
> Africa, the UK Treasury Select committee should seek a
> report from the IMF of the relationship between
> reforms associated with IMF lending and the capacity
> of governments in the region to the impending famine.
>
> 2. The IMF and the World Bankís Education for All
> Action Plan
>
> Summary of recommendation:
>
> ActionAid requests the UK Treasury Select Committee to
> seek a commitment that the Treasury will press the IMF
> to clarify its position on the macro-economic
> implications of the World Bankís Education for All
> Action Plan.
>
> ActionAid also recommends that the Committee directly
> ask Mr Kohler for such a clarification.
>
> ActionAid is a member of a Global Campaign for
> Education (GCE), whose members work in over 100
> countries around the world. Together with Oxfam and
> Save the Children, we have led the GCE in the UK. Over
> the past 3 years, we have been campaigning for the
> international community to launch a coordinated global
> initiative to achieve the 2015 goal of universal basic
> education.
>
> After years of talk and little action, a breakthrough
> was made in April at the Spring Meetings of the World
> Bank and IMF.  Development and finance ministers
> endorsed an Education For All (EFA) Action Plan which
> proposed the creation of a financing framework, to
> mobilize and channel the necessary resources to meet
> the education financing needs of all countries on an
> ongoing basis. As a starting point, the action plan
> commits to providing 18 ëfast track countriesí with
> immediate additional aid for education in 2002.  The
> Action Plan provides the best opportunity in a
> generation to get every child into school, and deliver
> on the most attainable of the 2015 goals.
>
> Education has also been identified as a priority area
> for the Treasuryís international policy by the
> Chancellor. In his speech to the UN Special Session
> for Children, he said that the ìWorld Bank initiative
> marks a major breakthrough - the first focused
> financing framework to ensure that no country
> genuinely committed to economic development, poverty
> reduction and good governance is denied the chance to
> achieve universal primary education through lack of
> resources.î
>
> The Action Plan has so far received only a small
> proportion of the funding needed for its full
> implementation. But despite the lack of concrete
> commitments at the G8 summit, additional support to
> fast track countries can be expected to begin in late
> 2002.
>
> However, ActionAid has heard concerns expressed by
> senior World Bank staff that the IMF will oppose a
> rapid expansion in education, on the grounds that
> using external funds to support a large increase in
> the number of teachers, and hence the salary bill,
> will create inflationary pressures, and threaten
> fiscal imbalance.
>
> ActionAid believes that the Millennium Development
> Goals must be the guiding principle of international
> development policy. In contrast, the Fund appears
> willing to sacrifice human development on the altar of
> fiscal rectitude. The IMF should clarify its position
> on this issue. The Fund should also work with the
> World Bank and other stakeholders to seek ways of
> retaining macro-economic stability, whilst ensuring
> that the desperately needed expansion of education in
> poor countries remains a primary policy aim.
>
> Therefore ActionAid requests the UK Treasury Select
> Committee to seek a commitment that the Treasury will
> press the IMF to clarify its position on the
> macro-economic implications of the World Bankís
> Education for All Action Plan, and also directly asks
> Mr Kohler for such a clarification.
>

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<blockquote type=cite class=cite cite>3 July 2002
Stop ‘careless’ IMF food advice for poor, Brown urged
Chancellor Gordon Brown is today urged to use his role
 as chair of the governing board of the International
 Monetary Fund to prevent a repeat of the “careless”
 advice which is alleged to have worsened the food
 crisis in Malawi. The plea comes as the IMF’s chief
 prepares to face questions from UK politicians on the
 relationship between the Fund and Britain. Horst
 Kohler, the IMF managing director, will be quizzed
 tomorrow (4 July) by members of parliament on the
 Treasury select committee. This is the first time a
 managing director of the fund will appear before a
 British select committee.
ActionAid calls on the MPs to press Mr Brown to limit
 the influence of the Fund in the crucial area of food
 security. In a memorandum (below) to the committee,
 the international development charity stresses the
 Fund lacks the expertise to instruct poor countries on
 decisions which affect food supplies.
ActionAid declares the IMF must reform after criticism
 that the Fund told the Malawian government to sell its
 emergency grain reserves to repay a &pound;9 million debt.
 ActionAid is calling for the Treasury to:
 &middot;<x-tab></x-tab>limit the overall role of the IMF in food security
 issues by ending inappropriate loan conditions.
 &middot;<x-tab></x-tab>where the Fund is giving advice with implications
 for food &shy; in agriculture, for example - ensure that
 potential impacts on poverty and vulnerability to
 problems such as drought are identified. IMF guidance
 on food emergencies should be accompanied by a “health
 warning” on the risk to food security
 &middot;<x-tab></x-tab>in the case of Malawi, require the Fund and
the
 World Bank to launch a closer study of the new poverty
 reduction strategy, in relation to how food security
 and farm production amid famine is being handled
 &middot;<x-tab></x-tab>seek a report from the IMF and the World Bank
on any
 potential links between agricultural reforms under
 Fund or Bank loans and the region’s looming food
 crisis.
Over seven million of Malawi’s 11 million people are
 acutely short of food, according to the country’s
 official sources. Already this year, up to 1,000
 people have died from hunger and hunger-related
 diseases in southern and central Malawi. Its
 government and aid agencies warn of disaster if more
 food does not reaxh the poorest soon.
ActionAid says these are Malawi’s first recorded
 famine deaths since 1949. The crisis represents policy
 failure in food security not just for global
 institutions, but also for Mr Brown, who recently laid
 out the aim of “credible strategies for food security”
 and described the need for action on hunger as
 “imperative”. The submission says the IMF advised the
 Malawian government to make cuts in reserves from
 165,000 tonnes to between 30,000 and 60,000 tonnes.
 After the government sold off almost all the reserve,
 the next harvest, forecast to be adequate, slumped
 amid drought, late rains and floods. In February the
 IMF delayed US$47 million in aid, despite the crisis
 and hundreds of starvation deaths. Private traders
 profiteered from the sale of the grain reserve, buying
 cheap maize, which was then hoarded until prices rose,
 before reselling for exorbitant prices. But the IMF
 pressed for the privatisation of the grain board
 without plans to combat risks from corruption.
Matthew Lockwood, ActionAid’s head of advocacy, said:
 “The IMF says its policy advice benefits poor people
 by producing sound economic policies and responsible
 public spending. But careless advice to Malawi, in a
 policy area where the Fund has little competence,
 deepened the food crisis for one of the world’s
 poorest countries. The Chancellor must assert his
 authority with the Fund to ensure that future guidance
 is responsible, reflects the IMF mandate and is based
 on sound assessment of its effects on vulnerable
 people.”
End
 Contact: Paul Collins 020 7561 7614. ActionAid out of
 hours media number: 077539 73486.
 Note to editors
 Horst Kohler will be questioned by the Treasury select
 committee at 10 am on Thursday (4 July) in committee
 room 15 at the House of Commons. Mr Kohler will give
 evidence to the committee after the Treasury’s report
 Responding to the Challenges of Globalisation &shy; The UK
 and the IMF 2001. Chancellor Gordon Brown chairs the
 International Monetary and Financial Committee, the
 key committee of the IMF’s board of governors and the
 main forum for discussing the Fund’s policies at
 ministerial level.
Memorandum from ActionAid to the Treasury Select
 Committee for the hearing with Mr Horst Kohler,
 Managing Director of the IMF.
1. The role of IMF in food crisis, with special
 reference to the case of Malawi.
Summary of recommendations for all PRGF countries:
ActionAid requests the UK Treasury Select Committee to
 seek a commitment that the Treasury will press for the
 IMF to institute, in collaboration with other domestic
 and international partners, a poverty and social
 impact assessment of all fiscal and institutional
 advice to Governments prior to the adoption of reform
 measures in the agricultural sector.&nbsp; The adoption of
 IMF advice on the management of emergency food
 security mechanisms (such as strategic grain reserves)
 should specifically be preceded by a food security
 impact assessment.
ActionAid also recommends that the Select Committee
 ask Mr Kohler for such a commitment.
With regard to the specific case of Malawi, the UK
 Treasury Select Committee should press the Treasury to
 seek assurance from the IMF and World Bank that the
 recently approved Poverty Reduction Strategy
 discussion in July will be subjected to a closer
 examination of the treatment of food security and
 agricultural production in the light of famine.
With regard to the wider food crisis in Southern
 Africa, the Committee should ask the Treasury to seek
 a report from the IMF on the relationship between
 reforms in the agricultural sector associated with IMF
 lending, and the ability of governments in the region
 to respond to the impending famine.
Between January and April 2002, at least 500 - 1,000
 people died of hunger and hunger-related diseases in
 southern and central Malawi. Malawi has suffered from
 a number of agricultural crises over the years,
 including a major drought in the early 1990s, but
 these are the first recorded famine deaths in Malawi
 since 1949. ActionAid regards these deaths as a major
 failure, by state and non-state parties, to realise
 the rights of Malawians to food, inter alia under
 Article 25 (1) of the Universal Declaration of Human
 Rights.
The events in Malawi also represent a failure from the
 point of view of UK Treasury policy in the area of
 food security, on which the Chancellor (in his recent
 speech to the UN Special Session on Children) said
 that action is “imperative”. After pledging a response
 to food crisis in Southern Africa in this speech, the
 Chancellor went on to specify the aim of developing
 “credible strategies for food security”.
ActionAid Malawi has close to twelve years of fighting
 poverty in several of the affected Malawian districts.
 With the Malawian Economic Justice Network and the
 Catholic Commission, ActionAid Malawi attempted to
 raise the impending famine as far back as November
 2001, three months prior to the state of disaster
 statement by the Head of State of Malawi.
There are both long term and immediate causes of the
 crisis, but policy failure plays a large role. A
 number of organisations have criticised the role of
 the IMF prior to and during the crisis.&nbsp; The criticism
 has largely been of the IMF’s involvement in three
 sets of policy advice namely, the adoption of an
 unsustainable cost-recovery strategy for the National
 Food Reserve Agency and subsequent running down of the
 grain reserves, the lifting of price control
 mechanisms and lastly, scaling back of essential
 inputs to small-scale agricultural producers.
On June 13th 2002, ActionAid released an independent
 comprehensive report commissioned by ActionAid Malawi
 and conducted by a team of researchers from Malawi and
 the Institute for Development Studies in the UK
 entitled “State of Disaster: Causes, Consequences and
 Policy Lessons from Malawi”. This report and
 subsequent communications with Alfred Kammer, Chief of
 the IMF Mission for Malawi in Washington DC
 establishes the following:
&middot;<x-tab></x-tab>In 2000, the IMF advised the government of Malawi
to
 reduce the strategic grain reserve (SGR) from 165,000
 tonnes to between 30,000 and 60,000 tonnes, on
 cost-effectiveness grounds. The government
 subsequently sold off virtually all the reserve by
 mid-2001. There was to be replenishment of the
 reserves through local purchases after the 2001
 harvest, which was forecast to be adequate. In the
 event this was not so. The IMF does admit that the
 policy advice it gave to government in 2001 was based
 on “wrong information” about crop production. Other
 donors are implicated in the production of this
 incorrect information.
&middot;<x-tab></x-tab>Despite acute crisis and hundreds of starvation
 deaths in January-February, an IMF Mission in February
 2002 did not immediately release of a disbursement of
 US$47 million, but “reached agreement with government
 on the way forward to resume disbursements later in
 the year”.
&middot;<x-tab></x-tab>In the May 2002 Article IV consultations, while
 acknowledging the need for “urgent action to prevent
 starvation” the Fund Mission report implied that
 National Food Reserve Agency (NFRA) and Agricultural
 Development and Marketing Corporation (ADMARC)
 activities to minimise famine mortality were
 unjustified and ‘unproductive’ thus, “the parastatal
 sector will continue to pose risks to the successful
 implementation of the 2002/03 budget. Government
 interventions in the food and other agricultural
 markets ultimately led to the National Food Reserve
 Agency (NFRA) and the Agricultural Development and
 Marketing Corporation (ADMARC) taking heavy recourse
 to budgetary financing, crowding out more productive
 spending.” (International Monetary Fund, Malawi &shy; 2002
 Article IV Consultation: Concluding Statement of the
 IMF Mission, IMF, Washington DC, 14 May 2002).
ActionAid does not believe that the IMF directly
 caused the famine in Malawi. However, the crisis and
 loss of lives reflects policy failure and a violation
 of the most basic of human rights, the right to
 adequate, nutritious, safe and culturally acceptable
 food. Consequently, ActionAid strongly urges the UK
 Treasury Select Committee to examine the following
 short- and long-term issues relating to the IMF’s role
 in countries undergoing acute food security programmes
 and implementing PRGF loans:
&middot;<x-tab></x-tab>The legitimate basis for IMF policy advice in
any
 sector lies in budgetary and macro-economic factors.
 However, other factors also count, and should be
 considered before any policy advice is given and
 policy change made. In most low-income countries,
 policy in the food-producing sector almost always has
 major food security implications. As it has stated,
 the IMF has no competence on food security issues and
 does not provide funds for food aid. It would not be
 able to assess the potential impact of policy change
 in the agricultural sector on food security on its
 own.
&middot;<x-tab></x-tab>Consequently ActionAid recommends that the IMF
 institute, in collaboration with other domestic and
 international partners, a poverty and social impact
 assessment of all fiscal and institutional advice to
 the Government prior to the adoption of structural
 reform measures in the agricultural sector.&nbsp; The
 adoption of IMF advice on the management of emergency
 food security mechanisms (such as strategic grain
 reserves) should specifically be preceded by a food
 security impact assessment.
&middot;<x-tab></x-tab>In the case of Malawi, it is clear that while
the
 IMF gave undue weight to fiscal discipline and pressed
 for the privatisation of parastatals without a risk
 management strategy for corruption and profiteering by
 traders. The combination of these two led to a
 depleted capacity of the state to respond using
 domestic resources and the inflation by 400% of
 essential foodstuffs. ActionAid finds it
 incomprehensible that budgetary rectitude and
 macro-economic stability came at the cost of the death
 by starvation of over 1000 Malawian men, women and
 children.
&middot;<x-tab></x-tab>In order to ensure that this kind of tragedy
is not
 repeated, ActionAid would seek assurances from the IMF
 (and the World Bank) that the recently approved
 Poverty Reduction Strategy discussion in July will be
 subjected to a closer examination of the treatment of
 food security and agricultural production in the light
 of famine.
&middot;<x-tab></x-tab>With regards to the wider food crisis in Southern
 Africa, the UK Treasury Select committee should seek a
 report from the IMF of the relationship between
 reforms associated with IMF lending and the capacity
 of governments in the region to the impending famine.
2. The IMF and the World Bank’s Education for All
 Action Plan
Summary of recommendation:
ActionAid requests the UK Treasury Select Committee to
 seek a commitment that the Treasury will press the IMF
 to clarify its position on the macro-economic
 implications of the World Bank’s Education for All
 Action Plan.
ActionAid also recommends that the Committee directly
 ask Mr Kohler for such a clarification.
ActionAid is a member of a Global Campaign for
 Education (GCE), whose members work in over 100
 countries around the world. Together with Oxfam and
 Save the Children, we have led the GCE in the UK. Over
 the past 3 years, we have been campaigning for the
 international community to launch a coordinated global
 initiative to achieve the 2015 goal of universal basic
 education.
After years of talk and little action, a breakthrough
 was made in April at the Spring Meetings of the World
 Bank and IMF.&nbsp; Development and finance ministers
 endorsed an Education For All (EFA) Action Plan which
 proposed the creation of a financing framework, to
 mobilize and channel the necessary resources to meet
 the education financing needs of all countries on an
 ongoing basis. As a starting point, the action plan
 commits to providing 18 ‘fast track countries’ with
 immediate additional aid for education in 2002.&nbsp; The
 Action Plan provides the best opportunity in a
 generation to get every child into school, and deliver
 on the most attainable of the 2015 goals.
Education has also been identified as a priority area
 for the Treasury’s international policy by the
 Chancellor. In his speech to the UN Special Session
 for Children, he said that the “World Bank initiative
 marks a major breakthrough - the first focused
 financing framework to ensure that no country
 genuinely committed to economic development, poverty
 reduction and good governance is denied the chance to
 achieve universal primary education through lack of
 resources.”
The Action Plan has so far received only a small
 proportion of the funding needed for its full
 implementation. But despite the lack of concrete
 commitments at the G8 summit, additional support to
 fast track countries can be expected to begin in late
 2002.
However, ActionAid has heard concerns expressed by
 senior World Bank staff that the IMF will oppose a
 rapid expansion in education, on the grounds that
 using external funds to support a large increase in
 the number of teachers, and hence the salary bill,
 will create inflationary pressures, and threaten
 fiscal imbalance.
ActionAid believes that the Millennium Development
 Goals must be the guiding principle of international
 development policy. In contrast, the Fund appears
 willing to sacrifice human development on the altar of
 fiscal rectitude. The IMF should clarify its position
 on this issue. The Fund should also work with the
 World Bank and other stakeholders to seek ways of
 retaining macro-economic stability, whilst ensuring
 that the desperately needed expansion of education in
 poor countries remains a primary policy aim.
Therefore ActionAid requests the UK Treasury Select
 Committee to seek a commitment that the Treasury will
 press the IMF to clarify its position on the
 macro-economic implications of the World Bank’s
 Education for All Action Plan, and also directly asks
 Mr Kohler for such a clarification.
 &nbsp;</blockquote>
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