The 2016 annual meetings in Washington took place in a context of continued slow world economic growth and trade, with the IMF and World Bank presenting themselves as the saviours of the economic order by supporting increased global trade. Given memories of the IMF and Bank’s push for trade and growth in the 80s and 90s, many were wondering ‘trade and growth for whom?’ Certainly the unquestioning belief that the private sector will discover its development mandate and become instrumental in ensuring the SDGs are achieved was alive and well in DC during the week. President Kim’s curt dismissal of community concerns at the town hall meeting seemed to validate concerns raised by staff throughout his first five-year term about his competence and indicate that the Bank will continue to push its agenda with little concern for the opinions of the communities it is mandated to serve.
As we covered, president Kim was reappointed unopposed by the Bank’s board for another five-year term in a severely-criticised process that united civil society, former and current Bank staff in opposition – no easy task. As has been widely publicised throughout Kim’s first term, staff have expressed grave concerns about Kim’s leadership style. Perhaps emboldened by his coronation, president Kim allowed what many staff would claim are his true colours to shine through during the CSO town hall meeting. Kim’s appalling performance during the meeting, in which he was dismissive of concerns raised by community members, was ‘the talk of the town’ and not only among the CSO community. Now reappointed, president Kim seems ready to disregard what he seems to think is a docile and ineffective civil society and to frame any Bank shortcomings as rare events that in no way represent the systemic problems identified by affected community members world-wide. Given the persistent concerns raised by civil society about systemic problems, such as the Banks unwillingness to live up to its human rights obligations and ensure effective protection of communities through robust safeguards, it will be interesting to see to what extent civil society will opt to engage in a process that disregards their opinions and concerns. Perhaps Kim and Lagarde will have an opportunity for a much more intimate dialogue at the next town hall meeting.
Civil society was not the only group concerned with the issue of developed-country influence at the Bank and Fund, as evidenced by the monopoly of leadership in the both institutions and shareholding arrangements. The G24, in its communique, repeated its call for greater representation of emerging markets and developing countries in both, including by reshaping the shareholding structure of the Bank, something that is currently under consideration.
While president Kim and managing director Largarde were no doubt very content in their reappointments, both were also expressing serious concerns about the continued woeful state of the world economy as outlined in the latest World Economic Outlook report which highlights continued slow-growth in world trade and weak demand. It was clear from both official panel discussions and ‘corridor exchanges’ that there is significant anxiety about the growing anti-globalisation populist movements. The Bank and Fund spent the week in Washington presenting themselves as the saviours of world trade and thus, they argue, the world economy and the poor and marginalised, by highlighting their commitment to a ‘new, kinder’ neoliberalism, as witnessed by the release of recent IMF research papers, the prominent place given to perils of inequality during this year’s annual meetings, and the release of the Bank’s recent report on poverty and shared prosperity. While civil society has certainly welcomed the focus on and rhetoric about inequality, it continues to call for coherence between Bank and Fund research and actions on the ground. Civil society also expressed its continued concern about efforts to boost global trade through the expansion of mega infrastructure projects arranged through very problematic and often very costly public-private partnerships.
The disparity between the Bank’s rhetoric and its actions was highlighted by, among others, yet another report on the negative impact of IFC investments in financial intermediaries, which continue to result in significant negative human rights and environmental impacts. The IFC’s involvement in funding coal projects in the Philippines, for example, in contravention to stated Bank policy, was heavily criticised by civil society. Affected communities can only hope that the arrival of the new CEO at IFC with substantial development experience will finally result in the alignment of IFC investments with its development mandate.
Civil society continued to raise criticisms of the recently approved new safeguards framework, with little interest from the Bank in revisiting the issue. The Bank continued to argue that, however flawed, the new framework is ‘better’ than the safeguards it replaced and, at any, rate, this is the best that can be done – with shareholders happily blaming each other for the intransigence. Civil society have now turned its attention to demanding input into the guidelines that will be used to implement the new system and have renewed calls for a coherent safeguards policy that applies to all Bank instruments, including development policy loans and Program for Results financing.
This year’s meeting took place as the Bank sought a substantial increase to the capital of its low-income arm, the International Development Association (IDA) component. It seems that the Bank has gotten its wish and that when the replenishment process is completed later this year, it will result in a substantial increase in resources. While there was strong support among civil society for the Bank’s strengthened support to poor countries under IDA, concerns remain. While uncritical support for IDA’s new ‘private sector window’ was the norm among major stakeholders, some wondered out loud about IFC’s ability to operate effectively in much more difficult and complex environments, particularly given its track record in ‘less challenging’ contexts. IFC’s reaction seemed a mix of fear and delight.
Efforts on the IMF side of the annual meetings can all be linked to the three interlinked challenges animating this week – globalisation’s legitimacy problem, the very real concerns over the deteriorating economy and, of course, what the Fund is preparing to do about it. This explains the announcement at the meetings of a contribution of $340 billion by 25 IMF members as bilateral creditors to the Fund to “maintain the IMF’s lending capacity”, to replace a $393 billion agreement from 2012 due to expire this month which had not been drawn on but was a significant element of the IMF’s lending ‘firepower’. The Fund’s lending is about to be increased, as we highlighted prior to the meetings, in Egypt most notably. As Max Lawson, attending the meetings on behalf of Oxfam, noted it remains to be seen whether the IMF’s fine words on inequality, labour rights or indeed gender equality will change much for people on the ground. Of course, the situation in Greece is treated like an outlier, though the years-old tussle between the IMF and its eurozone lending partners is no closer to being resolved and may indeed worsen, with little benefit to Greek citizens despite the IMF’s greater realism about whether Greece can or even should attempt to repay its debts.
Notable by their near absence in terms of discussion were many topics civil society would like to see given more, not less, prominence. Only the G24 discussed the ongoing work on tax referred to as BEPS – base erosion and profit shifting – that had been led by the OECD but morphed at last April’s spring meetings into the joint IMF, World Bank, UN and OECD ‘Platform for Tax Collaboration’. Though it has published, including to the G20, the work still seems rather fragmented amongst the partners (with the UN noticeable by its strange ‘silent partner’ role). Similarly, though concerns over indebtedness and crisis only seem to be growing, discussion of the longstanding calls for more developed debt resolution models or action to challenge the risk from vulture funds seems utterly absent, except again amongst CSOs and some developing country groupings.