[stop-imf] IMF's CIVIL SOCIETY NEWSLETTER (Interesting esp. HIV/AIDS)

[robert weissman]

The main feature in this dispatch from the IMF is an interview with
Peter Heller on financing for HIV/AIDS prevention and treatment.
Heller's comments relate directly to the letter from HIV/AIDS advocates
just posted.

Key comments from Heller:

Q: Is there any legitimate criticism of the IMF in its dealings with
poor countries facing vast HIV/AIDS infection rates?

A: I don=E2=80=99t think so. There is certainly no IMF ceiling that has
prevented the employment of nurses in Kenya or Uganda or elsewhere, as
has been alleged by some. It is true that in these countries we are
supporting programs in which there are ceilings on domestic bank
borrowing by the government that effectively limit the size of the
government budget deficit. Very occasionally, there are ceilings that
affect total government employment. But if governments say, =E2=80=9CWe can=
=E2=80=99t
employ people in health care because the IMF is preventing us,=E2=80=9D tha=
t=E2=80=99s
not really true. First, ceilings that may affect government employment
relate to total government employment.

...


Q: People who are not economists may have trouble understanding why
receiving a lot of money could create problems.

A: When a lot of money for HIV/AIDS treatment and prevention pours into
a country like Zambia or Malawi, there certainly would be no adverse
macroeconomic effects if the funds all went to buy pills. The only
question would be, are there sufficient people on the ground to hand out
these pills, and make sure that they=E2=80=99re handed out to the right peo=
ple?
But if only one-third of the money comes in for pills, and the rest of
it comes in to buy the services of nurses, doctors, and community health
workers, then the question is, do you have the capacity to expand the
supply of skilled professionals in that sector? If the answer is yes,
then there should not be a significant problem. But in many of these
countries, you don=E2=80=99t have that capacity.

...

Q: Is the IMF involved in the debate over generic versus brand-name
pharmaceuticals?

A: It=E2=80=99s not in our direct mandate, but we would support initiatives=
 for
countries to be able to use generic drugs, either that they produce
themselves or buy from third-party producers. Because they=E2=80=99re cheap=
er,
so a lot more people get treated.


------------

IMF's CIVIL SOCIETY NEWSLETTER

AUGUST 2004


This newsletter is prepared by the Policy Communication Division of the
IMF=E2=80=99s External Relations Department. It is based on submissions fro=
m
staff members involved in outreach to civil society.

The newsletter is published in English, French, Spanish, and Russian and
(except the Russian version) is posted on the IMF website at
http://www.imf.org/external/np/exr/cs/eng/index.asp. If you would like
to subscribe, you may sign up through the website notification system.

We welcome your feedback. If you have comments or questions, please send
an email to ngoliaison@imf.org or contact us by phone at (202) 623-9400
or by fax at (202) 623-8769.

All documents and papers referenced in the newsletter can be printed
from the IMF website at www.imf.org.

If you have problems accessing the links or downloading the
PDF-formatted documents, contact us at the numbers listed above and we
will be happy to send you copies.

****



IN THIS ISSUE

RECENT DEVELOPMENTS IN IMF-CSO RELATIONS

FEATURE ARTICLE:
An interview with Peter Heller on financing for HIV/AIDS prevention and
treatment

POVERTY REDUCTION:
IEO report: Poverty reduction strategy has fallen short of its potential
Vatican conference on poverty and globalization

CIVIL SOCIETY-IMF DIALOGUE:
IMF/World Bank dialogue with World Council of Churches moves ahead

LETTERS FROM THE FIELD:
Susan Adams, Vietnam
David Yuravlivker, Ecuador
Dennis Jones, Guinea

BULLETIN BOARD:
Other recent meetings between IMF staff and CSOs
Upcoming events
Inside the IMF
Selected speeches
Selected publications

RECENT DEVELOPMENTS IN IMF-CSO RELATIONS

Since the last issue of the Civil Society Newsletter, Rodrigo de Rato
has taken up office as head of the IMF. The new Managing Director, who
previously served as Finance Minister of Spain, was appointed in May
after the resignation of Horst K=C3=B6hler, who has since been elected
President of Germany. De Rato assumed his post on June 7, and
immediately set out to familiarize himself with the institution, and to
meet with leaders in member countries. This has involved a busy early
travel schedule, and de Rato initiated his contacts with civil society
organizations (CSOs) while overseas. Immediately after arriving in
Washington, the Managing Director visited Japan, China, Singapore, and
Vietnam; in the last country he held a meeting with international and
domestic NGOs, reported in this issue. In early August, he made his
first trip to Africa as head of the Fund, visiting Nigeria, Gabon,
Uganda, and Kenya. The visit involved wide-ranging exchanges of views
related to the strategies for promoting faster economic growth and
poverty reduction in the region; meetings with civil society
organizations were held in each country. In a speech to West African
leaders in Gabon, de Rato said the Fund=E2=80=99s African Department is bei=
ng
restructured with more staff added, to ensure that the institution is =E2=
=80=9Ca
reliable partner for Africa.=E2=80=9D He added that =E2=80=9Ca process of r=
eflection is
currently under way assessing the IMF's work with its low-income
members.=E2=80=9D In the weeks before the October 2004 Annual Meetings, de =
Rato
will continue reaching out to CSOs worldwide.

Over the past few months, pressure has been increasing on the
international community to make good on its commitments to assist the
poor countries=E2=80=94especially in Africa=E2=80=94as they battle the scou=
rge of
HIV/AIDS. The IMF has welcomed an emerging commitment by donors to
provide more resources to combat the disease; the Fund is working with
recipient countries to help them make the best possible use of the new
resources. Over the next several years, funding for HIV/AIDS prevention
and treatment is expected to rise dramatically. But such rapid increases
in external funding are not always an unmixed blessing: they can pose
serious challenges for countries seeking to absorb the added resources
effectively. If these challenges are not met, they could not only
compromise the expected benefits but also endanger longer-term political
support in donor countries. An interview in this issue with a senior
Fund staffer outlines many of the issues faced by developing countries
in using these resources. It also addresses=E2=80=94and refutes=E2=80=94rec=
ent
accusations that IMF-supported programs have restricted individual
countries=E2=80=99 responses to the crisis.

Back to Table of Contents

FEATURE ARTICLE

An interview with Peter Heller on financing for HIV/AIDS prevention and
treatment

Peter Heller, Deputy Director of the Fiscal Affairs Department of the
IMF, is a long-standing expert on the economics of health care in
developing countries. A former member of the World Health Organization=E2=
=80=99s
Commission for Macroeconomics and Health and a current member of the
Task Force on Poverty and Economic Growth of the UN Millennium Project,
Heller recently organized a meeting of IMF staff with representatives of
the international health community, bilateral donors, and NGOs on how to
manage the macroeconomic implications of the new flow of assistance for
programs focused on HIV/AIDS prevention and treatment (see article in
the IMF Survey, p. 202). He spoke about the challenges involved, at IMF
Headquarters in Washington DC in July. Excerpts:

Q: Is there any legitimate criticism of the IMF in its dealings with
poor countries facing vast HIV/AIDS infection rates?

A: I don=E2=80=99t think so. There is certainly no IMF ceiling that has
prevented the employment of nurses in Kenya or Uganda or elsewhere, as
has been alleged by some. It is true that in these countries we are
supporting programs in which there are ceilings on domestic bank
borrowing by the government that effectively limit the size of the
government budget deficit. Very occasionally, there are ceilings that
affect total government employment. But if governments say, =E2=80=9CWe can=
=E2=80=99t
employ people in health care because the IMF is preventing us,=E2=80=9D tha=
t=E2=80=99s
not really true. First, ceilings that may affect government employment
relate to total government employment. Governments generally recognize
that there are significant inefficiencies and excesses in many
ministries. Substitution of health workers or teachers in place of
administrators or clerks could, under many circumstances, be a
productive change. But we recognize that this is not so simple for
governments to do. And second, if new resources do come in for HIV/AIDS,
especially in the form of grants, there is always scope for these
ceilings within Fund programs to be reconsidered. Supplementary budgets
can be passed that take account of new budgetary resources, so these
ceilings should not be a binding constraint preventing employment for
HIV/AIDS treatment and prevention. I should also note that in some
countries, the Fund has made explicit provision for increasing the size
of the civil service to accommodate more teachers and health professionals.

Q: Still, the IMF does enforce spending limits.

A: Our core mandate is to help countries achieve and maintain
macroeconomic stability. That doesn=E2=80=99t mean we=E2=80=99re not flexib=
le. It does
mean that we can=E2=80=99t support a policy program that implies a high rat=
e of
inflation. There are limits. My understanding of recent research is that
once inflation starts rising above a certain level=E2=80=94and here economi=
sts
are still trying to understand whether that level is 5 percent or 10-11
percent=E2=80=94it becomes injurious to the prospects for real economic gro=
wth.
It=E2=80=99s injurious to an environment in which business can make decisio=
ns
that promote growth. And it=E2=80=99s injurious to the welfare of the poore=
st
members of society. The question is how to do as much as possible
without these macroeconomic constraints starting to bite. We would be
negligent if we just ignored these kinds of issues, because we would end
up weakening growth and hurting the poor=E2=80=94precisely the people we al=
l
want to help.

Q: When did new resources to support HIV/AIDS prevention and treatment
appear?

A: They are just starting to show up. The Global Fund to Fight AIDS,
Tuberculosis, and Malaria has been making commitments for roughly the
past three years. But it=E2=80=99s taken time for those commitments to be
translated into disbursements. That=E2=80=99s even more the case for Presid=
ent
Bush=E2=80=99s HIV/AIDS initiative, which only this year is starting to mak=
e
disbursements. The amounts of disbursements could mount significantly
next year=E2=80=94possibly raising total government spending in the health
sectors of some countries by 30 percent to 50 percent to 75 percent, or
even much more.

Q: People who are not economists may have trouble understanding why
receiving a lot of money could create problems.

A: When a lot of money for HIV/AIDS treatment and prevention pours into
a country like Zambia or Malawi, there certainly would be no adverse
macroeconomic effects if the funds all went to buy pills. The only
question would be, are there sufficient people on the ground to hand out
these pills, and make sure that they=E2=80=99re handed out to the right peo=
ple?
But if only one-third of the money comes in for pills, and the rest of
it comes in to buy the services of nurses, doctors, and community health
workers, then the question is, do you have the capacity to expand the
supply of skilled professionals in that sector? If the answer is yes,
then there should not be a significant problem. But in many of these
countries, you don=E2=80=99t have that capacity. It may take some time to
develop training programs to augment the supply. Until that happens,
what could occur is that the government starts bidding for the services
of the available people. Other parts of the public sector may demand
increased wages as well, arguing that =E2=80=9CThe nurses are getting highe=
r
salaries; why shouldn=E2=80=99t we?=E2=80=9D And governments may not be abl=
e to afford
giving higher salaries to everybody.

Q: Do the potential problems go beyond pressure on wages?

A: Another issue concerns the dedication of substantial external
resources to work on HIV/AIDS prevention and treatment. Does this match
the priorities of the government? For example, the new funding may allow
the government to do a great job on HIV/AIDS prevention and treatment,
but the government may find itself with few resources for other critical
elements of the health sector=E2=80=94for instance, no one to staff health
centers for routine maternal-child health visits. Malaria is not going
away, tuberculosis is not going away, all the sources of child mortality
are not going away. It=E2=80=99s not for us in the IMF to judge what the
relative priorities should be in the health sector. But we know that
governments do worry about a disproportionate focus vis-=C3=A0-vis other
sectors such as education, agriculture, water supply, and sanitation.
Spending in those areas might be powerfully productive in raising
economic growth and living standards.

Q: Some of the discussion on HIV/AIDS funding in poor countries brings
up the so-called =E2=80=9CDutch Disease.=E2=80=9D What does this mean?

A: The term is used for a currency appreciation arising from an inflow
of external resources that adversely affects export incentives and
incomes of producers in the export sectors. Let me give you a real-life
example: Coffee farmers in Uganda sell to a world market in which prices
are quoted in dollars. World coffee prices are slumping. The coffee
farmers may be poor to start with=E2=80=94coffee farmers are not rich in Ug=
anda
or in many other countries. Uganda receives more foreign aid. And this
leads to more demand for non-traded goods=E2=80=94non-imports=E2=80=94inclu=
ding workers=E2=80=99
labor. So demand rises for the currency that pays for these goods =E2=80=93=
 the
Uganda shilling. The shilling becomes relatively more valuable relative
to the dollar. What that means is that the Ugandan selling his coffee
for dollars gets fewer shillings for each dollar he makes. Suddenly his
income is going down even more. And the international competitiveness of
all Ugandan products declines. So =E2=80=9CDutch Disease=E2=80=9D refers to=
 a situation
where a significant inflow of external resources (whether for oil,
remittances, or foreign assistance) leads to an appreciation of the
exchange rate that may adversely affect the export sector.

Q: Given that scenario, can aid be a bad thing?

A: No. On balance, foreign assistance for low-income countries is a good
thing, and we recognize that most of the literature indicates that aid
facilitates growth. Although the Dutch Disease is a concern to be aware
of, we shouldn=E2=80=99t make too much of it, at least not at this point. O=
ur
perspective in the IMF increasingly is: bring the money on, and if it
really starts posing important macroeconomic challenges then we will
work with governments to try to address these challenges in a way
supportive of growth and poverty reduction. For instance, in
middle-income countries, maybe you need to import Sri Lankan or Filipino
nurses if you don=E2=80=99t have the local nurses on hand. The important th=
ing
to emphasize is that if foreign assistance can expand productive
capacity, there should not be a significant problem with the Dutch
Disease effect over the longer term. Certainly, HIV/AIDS treatment and
prevention should be a very supply-inducing kind of intervention.
Suddenly people, who hadn=E2=80=99t been able to work, can work again. Chil=
dren,
who had had to replace their parents in the fields, can go to school.
This is all for the good.

Q: Now that major funding has begun, how long will it continue?

A: Governments do face the question: can they count on this money for
long enough to feel comfortable hiring nurses and doctors? Or do
governments lack confidence that this money will come in a year from
now? If it doesn=E2=80=99t, that could mean a need to release the newly hir=
ed
nurses and doctors. Given the history of volatility of aid resources,
predictability is an enormous concern to countries, especially given the
nature of HIV/AIDS treatment. Once you=E2=80=99ve put someone on
antiretrovirals, you=E2=80=99re putting them on, hopefully, for the rest of
their lives. It=E2=80=99s not a situation in which you can put them on and =
say,
=E2=80=9COops, we don=E2=80=99t have them this year; we didn=E2=80=99t get =
the money.=E2=80=9D
Q: What can be done to make aid funds flow steadily and predictably?

A: At least two ideas are being discussed. Gordon Brown [Chancellor of
the Exchequer of the U.K. and Chairman of the International Monetary and
Financial Committee, the ministerial body that provides twice-yearly
guidance to the IMF] has proposed an International Finance Facility,
intended to provide the financial resources for a larger and more
reliable flow of aid. Jeffrey Sachs [Director of the Earth Institute at
Columbia University] has been arguing that more money should be provided
to the World Bank through the coming International Development
Association replenishment to make possible larger long-term commitments.
There has been a tremendous effort by the IMF, among others, to
emphasize to donors the need for greater predictability and stability in
foreign assistance. The trouble is that parliaments don=E2=80=99t pass budg=
ets
for 10-year periods. Not surprisingly, donors find it hard to promise
assistance for more than a few years.

Q: Has the success in lowering the cost of antiretroviral drugs helped
to ease the problems of financing HIV/AIDS work?

A: Certainly. But we must not lose sight of the fact that
pharmaceuticals do not account for all costs. The lowest cost that I
have seen for generic antiretrovirals is about $150 a year. But the
total cost of treatment is about $450 a year, so the labor and systems
cost is about $300 a year. That is, the actual drug is only one-third of
the cost of having someone on antiretrovirals.

Q: Is the IMF involved in the debate over generic versus brand-name
pharmaceuticals?

A: It=E2=80=99s not in our direct mandate, but we would support initiatives=
 for
countries to be able to use generic drugs, either that they produce
themselves or buy from third-party producers. Because they=E2=80=99re cheap=
er,
so a lot more people get treated.

Q: Discussion of financing for HIV/AIDS prevention and treatment in the
developing world tends to focus largely on Africa. Should the
geographical boundaries be expanded?

A: AIDS is a terribly important issue for countries including India and
China. In India, even with far lower prevalence rates, the number of
people with HIV/AIDS may reach levels, in the next decade, that are as
large as any other country in the world. But in terms of new money and
resources coming into those countries, it=E2=80=99s not going to create
potential macroeconomic problems, so it isn=E2=80=99t likely to significant=
ly
influence the IMF=E2=80=99s surveillance discussions with these countries. =
It
would of course concern us as an important underlying structural problem
affecting real growth rates, and creating demand for health expenditure.
There are a lot of poor people in those countries, there is a big
HIV/AIDS problem, and even larger health sector problems. We would
certainly approve of more Official Development Assistance being
channeled to countries like China and India.

Back to Table of Contents

POVERTY REDUCTION:

IEO report: Poverty reduction strategy has fallen short of its potential

The strategy that the IMF and the World Bank have followed for the past
five years to help fight poverty in low-income countries has fallen
short of its potential, the Fund=E2=80=99s Independent Evaluation Office ha=
s
concluded.

That assessment of the Poverty Reduction Strategy Papers (PRSP) and
Poverty Reduction and Growth Facility (PRGF) grew out of a detailed
study based on internal IMF documents, stakeholder surveys and country
background studies for Guinea, Vietnam, Nicaragua, Mozambique,
Tajikistan, and Tanzania. The World Bank=E2=80=99s Operations Evaluation
Department joined in some of the research.

In launching the PRSP and PRGF in 1999, the IMF and the World Bank aimed
to promote country ownership of anti-poverty programs. The papers
defining growth-oriented, poverty-fighting strategies would be written
by the countries themselves. Lending and debt-relief programs of the IMF
and World Bank would grow out of these strategies. The PRGF=E2=80=94under w=
hich
the IMF makes loans to poverty-plagued nations=E2=80=94was designed to make
=E2=80=9Cpro-poor=E2=80=9D growth the centerpiece of IMF-supported programs=
.

The evaluation did find some improvements in lending programs.
Anti-poverty spending has increased, although questions remain about how
=E2=80=9Cpro-poor=E2=80=9D was some of this spending. Programs show greater=
 fiscal
flexibility to accommodate higher aid flows. And the IMF-backed programs
require fewer structural conditions.

Nevertheless, these improvements do not add up to the envisioned
sweeping creation of country-owned strategies, the evaluators said. A
major reason for the gap between expectations and results is that
incentives focus on producing documents, the evaluation said. Also,
benchmarks that measure actual progress are scarce. And little attention
is given to differences between countries. Another deficiency is that
the PRSP process has not met the goal of fostering debate in poor
countries that extends beyond elite circles to the broad populace,
including the poor themselves.

Recommendations addressed to countries and to the IMF/World Bank for
upgrading the PRSP/PRGF process include:

=EF=81=AE=09The setting of benchmarks in each country; these would be open =
to
public scrutiny.
=EF=81=AE=09Preparation of clear, candid assessments of progress in each co=
untry
by IMF and World Bank staff.
=EF=81=AE=09Development of IMF tasks and priorities tailored to each countr=
y=E2=80=99s
circumstances, as opposed to uniform standards for IMF work in all
low-income countries.

Back to Table of Contents

Vatican conference on poverty and globalization

The call to reduce the debt burden of poor countries is being sounded
again, as concern mounts that the Millennium Development Goals (MDGs)
may be beyond reach of the poorest countries. While greater assistance
for many countries is clearly needed, the suggested strategy for
fighting poverty faces major practical obstacles, a senior IMF official
told a Vatican conference in July.

=E2=80=9COn the political front, the constraints to funding debt relief hav=
e
been severe and the generosity of some of the major creditor countries
has been limited, not least because of the weak constituencies for
foreign assistance in some of the larger countries,=E2=80=9D Jack Boorman,
consultant and advisor to IMF management, said at a seminar organized by
the Pontifical Council for Justice and Peace in Vatican City.

The one-day meeting, =E2=80=9CPoverty and Globalization: Financing for
Development, including the Millennium Development Goals,=E2=80=9D took plac=
e on
July 9. Other participants included Gordon Brown, U.K. Chancellor of the
Exchequer, and chairman of the International Monetary and Financial
Committee, along with representatives of the UN and Catholic NGOs, as
well as senior members of the church hierarchy. Representatives of Civil
Society Organizations from countries in the global South, including
Argentina and Zambia, spoke as well.

Brown lent a note of urgency to the proceedings, depicting prospects for
the MDGs as poor under present conditions. Hope for the Goals, he said,
lies in adoption of the proposed International Finance Facility (IFF),
which is designed to provide up to $50 billion a year in new development
assistance between now and 2015 through the proceeds of bond issues to
be repaid by donor countries. Brown also called for greater debt relief
for the poorest countries, especially their debt to multilateral
organizations.

Jean-Pierre Landau, a director of the European Bank for Reconstruction
and Development and a former Executive Director of the IMF from France,
said that France supports the IFF. But he laid out other ideas
tentatively proposed by a French presidential committee assigned to
devise ways of creating new aid resources. These include taxes on
armaments, on carbon emission, and on international currency
transactions. The last is the so-called =E2=80=9CTobin tax,=E2=80=9D propos=
ed by Nobel
laureate economist James Tobin of Yale University. Supporters of the
proposed tax estimate that it could bring in revenues of $100
billion-$300 billion a year.

For all of the discussion of ideas to expand the supply of aid funds
aimed at the poorest countries, debt relief =E2=80=93 including proposed 10=
0
percent write-offs =E2=80=93 was the theme most consistently sounded.

In his remarks, Boorman said that debt relief should be viewed in the
context of all aid channeled to poor countries. Seen in that light,
canceling debt is only one way to direct more funds into social service
programs in poor countries, and may not be the most effective way. More
financing from donor countries and multilateral lenders is clearly
needed to increase the total amount of resources available to fight
poverty and to help the poorer countries meet or at least approach the
MDGs. But access to new lending by donor countries can be jeopardized by
debt relief. When donors grant debt relief, they sometimes compensate by
making fewer new aid funds available, Boorman said. From donors=E2=80=99
perspective, the step is logical, because both debt relief and new
financing draw on national budgets. Boorman also urged the wealthier
countries to consider raising the amount of aid they give in the form of
grants, as opposed to loans, thereby protecting countries from seeing
their debt loads reach unsustainable levels.

Debt relief may be appropriate in some cases in which debt has already
reached unsustainable levels, Boorman acknowledged. But widespread debt
cancellation raises two other issues apart from the risk to new lending.
One is that some level of obligation may be necessary for the creation
or strengthening of a =E2=80=9Ccredit culture,=E2=80=9D Boorman argued. The=
 second issue
is one of equitable treatment. Some poor countries would not be eligible
for debt relief because they have managed their finances and debt
obligations prudently. Paradoxically, this would penalize them vis-=C3=A0-v=
is
countries that benefit from a debt write-off.

Back to Table of Contents

CIVIL SOCIETY-IMF DIALOGUE:

IMF/World Bank dialogue with World Council of Churches moves ahead

On May 7, IMF and World Bank staff participated in a meeting with
representatives of the World Council of Churches (WCC) at its
headquarters in Geneva. It was the fourth in a series of meetings that
was initiated in 2002 by correspondence between Konrad Raiser, then
General Secretary of the WCC, and former IMF Managing Director Horst
K=C3=B6hler and World Bank President James Wolfensohn. The purposes of the
meeting were to review progress in the discussions thus far, and to plan
for a possible meeting between the heads of the organizations.

The review of discussions (see Civil Society Newsletter, February 2004)
between the Bretton Woods Institutions (BWIs) and the WCC was based
partly on two papers distributed at the meeting, one written by WCC
representatives, and one prepared by Graham Hacche, Deputy Director of
the IMF=E2=80=99s External Relations Department, which attempted to clarify
areas of agreement and isolate areas of disagreement between the WCC and
the BWIs. WCC representatives said that their three main areas of
interest for further discussion with the BWIs, including at the planned
high-level meeting, are: how to eradicate poverty; justice and human
rights; and the =E2=80=9Cdemocratization=E2=80=9D of the BWIs. The Bank=E2=
=80=99s Katherine
Marshall, Director and Counsellor to the President on Values and Ethics,
referred to the WCC=E2=80=99s apparent underestimation of the importance of=
 the
MDGs to the work of the BWIs, and also stated that the Bank=E2=80=99s posit=
ion
on human rights was evolving, as were the BWIs=E2=80=99 policies on debt
reduction and restructuring.

With regard to the planned =E2=80=9Chigh-level meeting=E2=80=9D, the three =
parties
discussed possible venues, and format. One of the outcomes of such a
meeting sought by the WCC would be a public statement of common concerns
and objectives. The IMF pointed to the need for more work, whether
before or after the high-level meeting, to clarify common ground and
divergences of view. As the previous October 2003 meeting in Washington
had come to the conclusion that case studies needed to be undertaken to
reach greater clarity, participants suggested using the findings of a
case study on Honduras, currently being conducted by the German
churches, and, at the suggestion of the Bank and Fund representatives,
one on Tanzania.

Plans for the case studies, a possible subsequent staff meeting to
discuss them, and the high-level meeting, will evolve in the coming weeks.

Back to Table of Contents

LETTERS FROM THE FIELD:

Managing Director de Rato meets with Vietnamese NGOs
Susan Adams, Senior Resident Representative, Vietnam

During his visit to Hanoi on June 26, 2004, Managing Director Rodrigo de
Rato requested a special meeting with local and international NGOs in
Vietnam. He met later that day with representatives from five NGOs (two
local and three international). He briefed them on the relations between
Vietnam and the IMF; and asked about the particular challenges faced by
civil society in Vietnam, and how the IMF could strengthen its
partnership with civil society in the country.

The NGO representatives covered a variety of issues, including: the
growing problem of HIV/AIDS; the rollout of the Poverty Reduction and
Growth Strategy of Vietnam to the local/grassroots level; the challenges
of developing local human resource capacity; and the linkages between
monetary policy and microfinancing.

The Managing Director noted especially the NGOs=E2=80=99 concern about the
spread of HIV/AIDS and the authorities=E2=80=99 cautious response, particul=
arly
on the importation of low-cost antiretroviral drugs. The NGOs attributed
this cautious stance to concerns that the importation of such medicines
at this time might jeopardize Vietnam=E2=80=99s negotiations to join the Wo=
rld
Trade Organization (WTO). In that regard, de Rato pointed out that new
WTO rules now provided legal options for poor countries to import
low-cost medicines from third countries to deal with public health
problems such as HIV/AIDS. If those rules were not clear, however, they
should be clarified, and the Fund should be an advocate for poor
countries in that regard. Later in the week, the IMF Hanoi Office
followed up on this discussion by attending a conference on the trade
and legal aspects of the HIV/AIDS problem in Vietnam.

Vietnam was de Rato=E2=80=99s last stop on a week-long tour to Asia in late
June, which took him also to Japan, China, and Singapore. This was also
his first official travel as Managing Director of the IMF.

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A letter from Quito
David Yuravlivker, Resident Representative, Ecuador

In April, I participated in a meeting sponsored by UNDP to evaluate past
dialogue between the government and civil society in Ecuador. The
motivation was the government=E2=80=99s plan to launch a new round of
consultations with civil society on a poverty reduction strategy. There
were about 35 attending, including indigenous movements, women=E2=80=99s gr=
oups,
academics, journalists, former high government officials, and local
government representatives. Among the lessons drawn were the following:
=E2=80=A2=09There is no single methodology that fits all types of dialogue.=
 A lot
of thought and preparation are needed to bring about a fruitful dialogue.
=E2=80=A2=09To achieve results, it helps to focus on a small number of
well-defined issues and to enlist the support of well-chosen
facilitators. In 1998, some 25-30 leaders from various sectors and
political groups met in closed, intensive periodic retreats to discuss
solutions to the Ecuador-Peru conflict (the Cousin dialogue). Two former
presidents from the region were the facilitators. The meeting reached a
consensus to support the peace process, which led to the 1998 peace
agreement, signed by presidents Mahuad and Fujimori.
=E2=80=A2=09Developing a culture of dialogue builds social capital and has =
value
in and of itself.  The national dialogue organized by the indigenous
movement in 2003, at the start of the current administration,
contributed to developing a culture of seeking consensus through
dialogue. However, for proposals to materialize there is often a need to
overcome limitations in the operations of public sector systems and to
ensure continuous commitment from the highest levels of government.

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A field trip to Haute Guin=C3=A9e
Dennis Jones, Resident Representative, Guinea

My field trip to Haute Guin=C3=A9e with AFRICARE gave me first-hand insight
into the development needs of some of the isolated parts of Guinea. For
a visitor, first there is the problem of access. The trip takes nine
hours by road from Conakry (the last 100 km on wholly unpaved roads),
and villages have no true road access. The rains did not cause us too
many problems going, but on the return trip, the heavens opened, and
three hours were added to the journey. Second, communication by other
means is virtually nonexistent=E2=80=94there has been no phone service sinc=
e
2002. And many conveniences that we take for granted, such as
electricity and water, can also be absent or difficult to obtain outside
the main town.

We found many other problems that affect the lives of people in such
remote areas. In that context, it was good to see a number of projects
bearing results in terms of agricultural production (new crops, new
techniques, longer and more stable production cycles); grain storage,
food transformation (soy milk, dried vegetables, oils and creams from
nuts); nutrition (nutrition plans, well digging and maintenance, and
water treatment); health education (for mothers and infants mainly, but
also wider education on sexually transmitted diseases and HIV/AIDS
awareness); and literacy programs. Many of the projects focus on
empowering local groups, with the aid of field coordinators, which often
results in strong women's groups that are motivated and appear to moving
toward self-sustainability. As income-generating activities develop,
greater awareness and use of financial systems become evident, mainly
through established micro-finance institutions such as Cr=C3=A9dit Rural.
These groups seem to be working well, with the local authorities giving
visible support, and also assistance from other agencies.

The three villages we visited were of significantly different sizes (one
about 100 inhabitants, another of some 800, and the last about 2000),
and had had AFRICARE involvement for different periods, which has
allowed some assessment of how the projects and the communities can
develop. The range of problems to be tackled has moved from mainly
questions of availability of basic resources toward matters of internal
administration and how to take charge when AFRICARE's direct involvement
phases out. This indicates that progress is being made, but highlights
the importance of ensuring that clear systems of accountability and for
measuring continuing progress (e.g. financial record keeping and health
indicators) are put in place.

For more information on AFRICARE, please visit:
http://www.usaid.gov/gn/nrm/news/030411_foodforpeace/africareindinguiraye.h=
tm.


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Bulletin Board

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notification system.

Other recent meetings between IMF staff and CSOs

=E2=80=A2=09On May 12, the Nicaragua mission team, headed by mission chief =
Philip
Young, met with Nicaraguan and British NGOs at IMF headquarters in
Washington to discuss the country=E2=80=99s economic progress on issues suc=
h as
external debt, taxation, and the budget.
=E2=80=A2=09On June 3, Global Witness, a U.K.-based NGO that works on the i=
ssue of
extractive industries transparency, met with Menachem Katz, Assistant
Director of the IMF=E2=80=99s African Department, Bill Allan and G=C3=BCnth=
er Taube,
Section Chief and Senior Economist respectively, Fiscal Affairs
Department (FAD), and Anton Op de Beke, Senior Economist in the Policy
Development and Review Department (PDR). They also attended a meeting
with IMF staff and other Washington-based NGOs. Global Witness asked IMF
staff to adopt best practice by individual country teams and Fund
departments into the Fund=E2=80=99s overall policy and to make revenue
transparency a condition of all IMF lending and technical assistance
programs.
=E2=80=A2=09Klaus Enders, Assistant Director of the IMF Offices in Europe,
participated in a panel discussion on =E2=80=9CDoes the HIPC Initiative Rea=
ch
the Poor?=E2=80=9D at the bi-annual Katholikentag, the German Catholics=E2=
=80=99
Conference, June 17-18 in Ulm, Germany. Other panelists included
representatives from NGOs, faith-based organizations, and the German
Development Ministry.
=E2=80=A2=09On June 21, Peter Heller, FAD=E2=80=99s Deputy Director, met wi=
th U.K.-based
NGOs in London to discuss general issues associated with the Fund=E2=80=99s=
 role
in low-income countries and more specifically on aid absorption for
HIV/AIDS. He also met separately three members of a Parliamentary
committee working to strengthen the U.K.=E2=80=99s response to the HIV/AIDS
epidemic in Africa.
=E2=80=A2=09On July 22-23, Jean-Pierre Chauffour, IMF Representative to the=
 WTO,
who also liaises with the Geneva-based UN agencies, attended the
UN=E2=80=93Social Forum on Human Rights and Poverty, an initiative of the U=
N
Sub-Commission on the Promotion and Protection of Human Rights. This
second round of the Social Forum focused on the contribution of human
rights approaches to the fight against poverty at the national and
international levels. It was organized around four panels, of which two
were of more direct relevance to the Fund: (1) poverty and human rights:
empowerment of people living in poverty; and (2) the role of human
rights in the development of operational strategies to address poverty.
The proposed rights-based approach, as some participants highlighted,
resonates with many features of existing poverty reduction strategies
(PRSs) supported by the Bretton Woods Institutions.
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Upcoming events
=E2=80=A2=09The 2004 Annual Meetings of the World Bank and the Internationa=
l
Monetary Fund and related meetings and events will be held in
Washington, D.C. on October 2-3, 2004. As always, a number of policy
dialogue sessions for interested CSO representatives will be organized
before and during the Meetings. CSO representatives, like all other
visitors, must apply for accreditation in order to gain access to the
Annual Meetings venues and related events. For the 2004 Annual Meetings
CSOs can request accreditation through a new web-based accreditation
system at: https://www.imf.org/external/am/2004/csoreg/reg.asp. The
system was launched on July 1 and applications for accreditation from
interested CSOs will be accepted through September 3. If you are
interested in participating in the Annual Meetings, please apply for
accreditation as soon as possible, and immediately proceed to obtain a
visa to enter the U.S., if necessary. More information on the
accreditation process can be found at:
http://www.worldbank.org/civilsociety/.

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Inside the IMF
=E2=80=A2=09The Fund formally set up a dedicated PSIA group in July, 2004 (=
see
Civil Society Newsletter May 2004). This initiative is the most recent
example of the Fund=E2=80=99s recognition of the need for a more systematic
approach to integrating poverty and the social impact of policies into
the design of PRGF-supported programs. The group is situated at the
Fiscal Affairs Department of the Fund, within the Expenditure Policy
Division, and will be made up of four experts. Two experts joined as of
July 1. David Coady, who previously worked at the International Food
Policy Research Institute (IFPRI) in Washington, has extensive
experience in the analysis of tax reform, social expenditures, and
program evaluation. Prior to joining IFPRI, Coady was an academic at
both University and Queen Mary Colleges in London. Moataz El-Said, who
also worked previously at IFPRI, has extensive experience in the
application of quantitative techniques to policy issues such as trade
and price liberalization and their implications for poverty reduction
efforts. The remaining staff is expected to join in the coming months.
=E2=80=A2=09Montek Singh Ahluwalia, Director of the Independent Evaluation =
Office
(IEO) since it was set up in 2001, resigned in June to become Deputy
Chairman of India's Planning Commission (the Chairman being the Prime
Minister). IMF Management and the Executive Board congratulated him on
his appointment and expressed their appreciation for his work at the
IEO. Ahluwalia also received much feedback from CSOs who said they were
saddened by the news of his departure and expressed their respect for
the integrity and professionalism he brought to the IEO. David
Goldsbrough, the IEO=E2=80=99s Deputy Director, will serve as Acting Direct=
or
until a successor is found.
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Selected speeches
=E2=80=A2=09Opening Remarks by Mr. Agust=C3=ADn Carstens, Deputy Managing D=
irector, at
the Third Regional Conference on Central America, San Pedro Sula,
Honduras, July 8, 2004
=E2=80=A2=09The IMF at 60: Equipped for Today's Challenges? Address to the
American Academy, by Anne O. Krueger, First Deputy Managing Director,
Berlin, June 23, 2004
=E2=80=A2=09Trade, Jobs and Growth: Why You Can't Have One Without the Othe=
rs,
address by Anne O. Krueger, First Deputy Managing Director, Reuters
Trade, Globalization and Outsourcing Conference, New York City, June 15,
2004
=E2=80=A2=09The IMF at 60=E2=80=94Evolving Challenges, Evolving Role, openi=
ng remarks by
Rodrigo de Rato y Figaredo, Managing Director, at the Conference on
"Dollars, Debts and Deficits=E2=80=9460 Years After Bretton Woods", Madrid,
Spain, June 14, 2004
=E2=80=A2=09Economic Growth in a Shrinking World: The IMF and Globalization=
,
address by Anne O. Krueger, Acting Managing Director, to the Pacific
Council on International Policy, San Diego, June 2, 2004
=E2=80=A2=09Address to the World Trade Organization General Council, by Ann=
e O.
Krueger, Acting Managing Director, Geneva, May 18, 2004
Back to Table of Contents
Selected publications
=E2=80=A2=09Educating Children in Poor Countries, by Arye L. Hillman, Eva J=
enkner,
Economic Issues No. 33
=E2=80=A2=09The End of Textiles Quotas: A Case Study of the Impact on Bangl=
adesh,
Montfort P. Mlachila, Yongzheng Yang, Policy Development and Review
Department, Working Paper No. 04/108
=E2=80=A2=09Debt Accumulation in the CIS-7 Countries: Bad Luck, Bad Policie=
s, or
Bad Advice, by Thomas F. Helbling, Ratna Sahay, Ashoka Mody, Research
Department, Working Paper No. 04/93
=E2=80=A2=09Does Financial Globalization Induce Better Macroeconomic Polici=
es? By
Irina Tytell, Shang-Jin Wei, Research Department, Working Paper No. 04/84
=E2=80=A2=09The IMF and the Force of History: Ten Events and Ten Ideas that=
 Have
Shaped the Institution, by James M. Boughton, Policy Development and
Review Department, Working Paper No. 04/75
=E2=80=A2=09How Has NAFTA Affected the Mexican Economy? Review and Evidence=
, by
Guy M. Meredith, Western Hemisphere Department, Ayhan Kose, Christopher
M Towe, Research Department, Working Paper No. 04/59