[stop-imf] Poverty Reduction Subordinated to IMF Control - CNES

[rob@essential.org]

CNES "Services for All (SFA)" Newsletter

March, 2004.

Recent Article on CNES Website
Did you see...

The Millennium Development Goals (MDGs)
in an Unaccountable Global Order

by

Nancy Alexander (NCAlexander@igc.org) and Tim Kessler (TKessler@coditel.net=
)
Citizens=B9 Network on Essential Services (CNES)
December 2003

[Draft for submission to Global Future]


The MDG Campaign needs to call for alternatives to neoliberal policies.
Although the Campaign seems laudable, it is not likely to achieve its noble
goals if it helps legitimize existing institutions that govern economic
policy. During the 1990s, 54 developing countries suffered =B3negative
growth,=B2 while another 71 experienced only 0-3% growth.[1] The richest
quintile increased its average per capita consumption by 18% between 1993
and 1997, while the poorest gained less than two percent.[2] From 1980-2000=
,
growth in most countries implementing neoliberal policies declined
significantly compared to the preceding 20 years. As the UNDP=B9s Jan
Vandemoortele concludes: =B3If the 1980s were the =B3lost decade for
development,=B2 the 1990s was the =B3decade of broken promises.=B2[3]

Alternatives to neoliberal policies cannot be achieved while the
International Financial Institutions (IFIs) undercut the process of creatin=
g
a national poverty plan. The IFIs require that each low-income government
prepare a Poverty Reduction Strategy Paper (PRSP) =8B viewed as a =B3roadma=
p=B2 to
meeting the MDGs. They claim the PRSP is a =B3country-owned=B2 national
development strategy, even though they themselves must =B3endorse=B2 each o=
ne in
order to qualify governments for financing and debt relief. As one World
Bank official noted: =B3The PRSP is a compulsory process wherein the people
with the money tell the people who want the money what they need to do to
get the money.=B2[4]

The IFIs use the PRSP to promote a range of macroeconomic and structural
policies: privatizing public services, cutting agricultural subsidies,
maintaining fiscal surpluses, etc. Final versions of PRSPs rarely say much
about the policy analysis and recommendations of citizens=B9 groups or elec=
ted
officials. Concerned that the IFIs promote neoliberal policies as solutions
to virtually all problems, UNDP Administrator Mark Malloch-Brown called for
a =B3guerrilla assault=B2 on them. As another UN official said, =B3Pursuit =
of the
MDGs could well be undermined in the future, as it has been in the past, if
there is no change in adjustment policies.=B2[5]

Although each PRSP includes time-bound performance benchmarks =8B ostensibl=
y
to help reach MDGs--those benchmarks are also used to subject borrowing
countries to greater policy discipline. More importantly, the IFIs =B3trump=
=B2
the PRSP in key policy domains:

*

IMF. The IMF=B9s =B3PRGF Factsheet=B2 states that =B3the targets and policy
conditions in a PRGF-supported program are drawn directly from the country'=
s
PRSP." In practice, the reverse is true. The IMF requires that MDG goals of
each PRSP be consistent with its prescribed budget envelope and structural
policies. Since the IMF does not publicly disclose its own goals, PRSP
consultations proceed without information about whether government is likel=
y
to have sufficient resources to implement policy priorities.

*

World Bank. For low-income countries, the World Bank conducts a Country
Policy and Institutional Assessment (CPIA), much of which rates governments
on how faithfully they adopt neoliberal policies. They can matter more than
a PRSP, helping determine how much aid a government can access and which
policies it must adopt. Indeed, the Bank has stated that its policy
prescriptions are =B3increasingly focused on aspects of the CPIA that are
shown to be weak.=B2 In order to make their PRSP acceptable, borrowers have
been known include private provision of social and infrastructure services.
Given well-known problems of privatized basic services without adequate
regulation, such policies are unlikely to help meet the MDGs in countries
with weak institutions.




Far from using the international finance and trading system as a vehicle fo=
r
pro-poor growth, powerful countries are pursuing a realpolitik strategy of
intimidation and pressure. The US now maintains that it will work to
restrict multilateral trade capacity-building aid to governments that don=
=B9t
pursue trade liberalization aggressively enough. At the behest of its
wealthiest members, the WTO is asking that priorities from its trade policy
review be integrated into PRSPs =8B a practice that would make an even grea=
ter
mockery of =B3country ownership.=B2

Of all the MDGs, only last one =AD a =B3global partnership for development=
=B2 =8B
addresses the accountability of rich countries. Although that goal includes
commendable targets, (e.g., debt relief, pro-poor trading system, technolog=
y
transfer) it is unlikely that anyone will be held accountable for achieving
them. The MDGs may become an ever more distant dream if donors and global
governance institutions are not radically reformed. Harvard economist Dani
Rodrik suggested a useful starting point for that reform: =B3International
economic rules must incorporate `opt-out=B9 or exit clauses [that] allow
democracies to reassert their priorities when these priorities clash with
obligations to international economic institutions.=B2[6] Critics of
development assistance maintain that governments will not achieve the MDGs
until they are made accountable to their citizens =AD and they are right. B=
ut
that accountability cannot be imposed externally by the IFIs or mandated
through their blueprinted policies.

End Notes

1. =B3Human Development Report 2003 Charts Decade Long Drop in 54 Countries=
,=B2
July 8, 2003.
2. =B3MDGs at Work at the Country Level,=B2 UNDP.
3. Jan Vandemoortele, =B3Are the MDGs feasible?=B2 UNDP, Bureau for Develop=
ment
Policy, July 2002.
4. John Page speaking to NGO Forum at InterAction in Washington, DC on Apri=
l
12, 2000.
5. Richard Jolly, =B3Global Goals: The UN Experience,=B2 Background paper f=
or
HDR2003, 2003.
6. Dani Rodrik, =B3Four Simple Principles for Democratic Governance of
Globalization,=B2 Harvard University, May 2001.

Nancy C. Alexander
Director, Citizens' Network on Essential Services (CNES)
9703 Hedin Drive
Silver Spring, MD 20903
Phone: 301-270-1000
FAX:=A0=A0=A0 301-445-7321
Email:ncalexander@igc.org
Web: www.servicesforall.org