Select Committee on Treasury Minutes of Evidence


Memorandum submitted by Bretton Woods Project

INTRODUCTION

  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 annual reports).

MAKING THE REPORT FORWARD LOOKING AND MONITORING IMPLEMENTATION

  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 needs.

  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).

Suggested actions

  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 decisions.

SETTING THE UK'S POSITION IN A MULTILATERAL CONTEXT

  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.

Suggested action

  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.

REFLECTING NON-OFFICIAL CONTRIBUTIONS TO THE DEBATES

  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.

Suggested actions

  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.

JOINED UP GOVERNMENT

  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 subjects discussed.

Suggested actions

  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.

DETAILING THE UK'S POSITION

  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 report.

Suggested actions

  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.

CONCLUDING REMARKS

  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


 
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