Memorandum submitted by Bretton Woods
1.1 The Bretton Woods Project welcomes the
publication of the Treasury's third annual report to Parliament
on UK operations at the IMF as part of ongoing progress towards
greater accountability. The last 18 months have also seen other
steps towards increasing the accountability of the IMF and that
of the UK government as a powerful player within it. These include
the establishment of the IMF's Independent Evaluation Office,
which the Bretton Woods Project and the UK government have done
much to press for. The UK Chancellor has also, with Clare Short,
Secretary of State for International Development, established
a regular procedure of setting down on paper the UK Government's
key objectives for each World Bank/IMF Annual and Spring Meetings
and holding meetings with interested NGOs and faith-based groups.
1.2 We are encouraged that the 2002 report
continues to expand coverage of the key decisions taken at the
IMF and the priority issues on the Executive Board's agenda. The
inclusion of this summary information is very helpful for those
unable to regularly track the debates. There are, however, further
improvements that we feel should be made for the report to serve
as an effective vehicle for parliamentarians and British citizens
to hold the Treasury and the UK Government to account. These are
stated below (with some overlap with comments made about previous
2.1 The report provides a useful overview
of the key decisions that have been taken and gives some indication
of the UK's current priorities. However, it provides no detail
of the UK's agenda for the coming year and how this is reflected
in the IMF's work programme. In terms of decisions already taken,
it would be helpful if the report could critically assess their
likely effectiveness and what other steps it may be necessary
to take to effectively implement them, bearing in mind that different
countries at different stages of development have very different
2.2 Examples of key issues where monitoring
implementation will be very important include the IMF's pledge
to reduce conditionality. There is already concern that in a November
2001 stand-by agreement with Romania, for example, the Fund is
continuing to apply conditionality beyond the three core areas
(see Bretton Woods Update, May/June 2002, p 4).
2(a) The report should critically assess
the impact of decisions taken and identify further measures the
IMF should take to ensure they work effectively.
2(b) The report should include a section
outlining UK priorities for the coming year and identifying key
opportunities for advancing them.
2(c) The report should provide detail of
on-going key discussions and the anticipated timetable for key
3.1 In terms of forthcoming discussions,
whilst it is important to know the UK's position, others (governments,
staff and management) often have conflicting viewpoints or priorities.
It would be helpful if these were reflected in the report to give
a fuller flavour of the extent of debate and the context in which
the UK is working. Moreover, it would be helpful if the report
could summarise why the Government does not agree with others'
positions. The 2001 report does not include sufficient improvements
in this respect, although it does mention for example the fact
that the US is "vetoing" implementation of the Special
SDR (Special Drawing Rights) allocation. This sort of information
should be included more systematically.
3.2 The report mentions (paragraphs 3.80-3.82)
efforts to increase the co-ordination of European input to the
IMF. This is in principle welcome, as long as EU governments are
responsive to the concerns of the weaker countries in the IMF.
The report does not, however, link this point to the challenge
of "Enhancing the Voice of the Poorest Countries" (box,
page 56). A number of commentators have proposed that the European
governments need fewer Executive Directors on the Board if they
are co-ordinating more closely on IMF inputs. This would mean
that they could make available at least one of their permanent
Board places to African governments.
3(a) The report should outline the various
positions held by other constituencies outside the G7, such as
the "emerging markets" and the poorer developing countries.
4.1 Whilst there are debates going on inside
the Executive Board, there is also considerable debate outside.
Academics, trade unions, NGOs and parliamentarians have produced
analyses and proposals either about IMF programmes in general
or about the IMF's involvement in specific countries. Parliamentarians
in Argentina, Kenya and Nigeria, have for example been very active
in discussions about the IMF's programmes there. These wider debates
are barely touched upon in the report, which can appear fairly
dry and technical in many places. Without touching on such inputs,
the Treasury Report does not convey the full extent of the considerable
debate concerning the IMF's roles, legitimacy and effectiveness.
There have been several occasions when UK-based NGOs and others
have sought to input into Treasury decision-making processes,
particularly in relation to key international meetings such as
the G7 summit, yet it is unclear to what extent the Treasury takes
notice of and acts upon these discussions. It would be helpful
if the Treasury could detail what issues they have actively sought
outside input on, which sources they have consulted and how policies
have changed in the light of these actions.
4.2 Examples of key current issues meriting
the inclusion of non-official views include:
The IMF's roles in preventing and
managing financial crises and in possible new mechanisms for debt
arbitration. (See, for example For Richer, For Poorer? G8 Proposals
for IMF Reform, Bretton Woods Project, September 2001).
The case of Argentina, including
the IMF's partial responsibility for the crisis and its possible
roles in resolving it.
The concerns by some developing country
officials and researchers about the relevance and implementability
of the codes and standards.
4(a) The report should summarise the view
points of stakeholders outside the IMF decision making process
and point to sources where alternative analysis and information
can be obtained (such as websites).
4(b) The report should summarise what input
has been used from sources outside the Treasury and the IMF, eg
southern governments, academics, NGOs and the private sector,
into discussions on key IMF issues.
5.1 Many issues the Treasury is concerned
with have an impact on developing countries. Thus it is essential
that there is effective collaboration between DFID and the Treasury.
It would be useful if the Treasury Report could include details
of whether the Treasury or DFID, for example, is leading on a
particular issue and how they are collaborating, particularly
on deciding policies.
5.2 The report should include a list of
relevant reports, think-pieces, speeches and policy documents
by the minister and senior staff and details of how they can be
obtained. It would also be helpful if the report included more
references to key IMF policy papers and research findings on the
5(a) The report should further clarify how
the Treasury is collaborating with other government departments,
such as DFID, to ensure consistency on IMF issues.
5(b) The report should provide a summary
of resources produced by the Treasury and other government departments
on IMF activities.
6.1 Whilst the report gives a clear presentation
of the decisions taken, and indicates the UK's broad support in
certain areas, it does not fully detail what the UK's position
was on each (ie how it did or would have voted). Thus, it does
not provide sufficient additional information to that currently
available from other sources such as statements by the International
Monetary and Finance Committee and the G7 and the IMF's annual
6(a) The report should as a minimum, make
reference to other documents such as policy and research papers
where the Treasury's policy line is outlined in more detail.
6(b) The report should state what the UK's
position was on all key decisions and include an annex detailing
the position taken by the UK on all day-to-day IMF Board decision
and what the board's decision was.
7.1 The Bretton Woods Project welcomes the
process of the UK Treasury producing an annual report on its involvement
in the IMF. It also welcomes the interest of the Treasury Select
Committee of the current parliament in these issues and its solicitation
of inputs from interested parties. The Project is ready to provide
further information, analysis or contacts in writing or in person
at any time.
We would also urge the Committee to develop
further direct contacts with equivalent committees in other countries.
The complex and demanding job of scrutinising the IMF, an extremely
important and powerful global institution will be made much easier
if elected representatives do more to share views, reports and
approaches directly. We are convinced that your colleagues in
other parliaments, particularly those of the weaker IMF member
countries, would feel greatly empowered to develop more systematic
links with representatives of the stronger ones, such as the UK.
15 May 2002