Memorandum by Angela Wood, Bretton Woods
The Bretton Woods Project welcomes the publication
of the Treasury's second Annual Report to Parliament on UK
Operations at the International Monetary Fund. We believe
that the report signifies an important step forward for greater
accountability and we hope that the Chancellor and his staff will
encourage other countries to do likewise.
In our evidence to the Committee last year (see
Treasury Committee Third Report, session 1999-2000, p 94) the
Bretton Woods Project made several recommendations for improving
the annual report. We are very pleased that this year's report
gives a fuller account of the key decisions taken at the IMF and
the priority issues on the Executive Board's agenda. The report
is a useful summary and a good resource for those who do not follow
the debates on a regular basis.
Having said this, there are still a number of
weaknesses that should be addressed if the report is to be an
effective means for parliamentarians and others to hold the Treasury
and the UK Government to account. The points noted below overlap
with remarks made on the first annual report but they remain important
and in the interests of greater transparency and accountability
it is worth repeating them again here.
Whilst the report gives a clear presentation
of the decisions taken, and indicates the UK's broad support in
certain areas, it does not actually detail what the UK's position
was on each (ie how it did or would have voted). Nor does it detail
why the Government holds a particular view point. Thus, it provides
little additional information to that currently available from
other sources such as statements made by the International Monetary
and Finance Committee and the G7 and the IMF's annual report.
Action: as a minimum, make reference to other
documents such as policy and research papers where the Treasury's
policy line is detailed.
Action: The report should clearly state what
the UK's position was on all key decisions and should include
an annex detailing the position taken by the UK on all day-to-day
Board decisions and what the Board's decision was.
The report provides a useful overview of the
key decisions that have been taken and gives some indication of
its 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. This makes it difficult to judge the effectiveness
of the UK or what limitations there are to achieving UK goals
in a multilateral context. For example, the report notes that
the Government supports a change in the process for appointing
the IMF Managing Director, but it gives no indication of what
changes it would prefer and when decisions on this will be made.
Action: Include a section which outlines
UK priorities for the forthcoming year and identifies key opportunities
and a timeline for advancing them.
Action: Provide detail of on-going key discussions
and the anticipated timetable for key decisions.
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
For example, whilst the paper discusses the
decisions taken on implementing codes and standards it makes no
reference to the concerns of developing countries that these may
not be relevant to them or what actions the IMF is taking to address
this concern. Another example is the discussion on Poverty Reduction
Strategy Papers (PRSPs). Although it is useful to know what the
PRSPs are supposed to achieve, the paper does not reflect any
of the experience so far, for example the difficulties and limitations
of the process in practice, and what steps are being advocated
to improve the process, for example what guidelines or incentives
may be necessary for IMF staff.
Action: Critically assess the impact of decisions
taken and identify further measures the IMF should take to ensure
they work effectively.
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'
Action: Outline the various positions held
by other constituencies outside the G7, such as the "emerging
markets" and the poorer developing countries.
Whilst there are debates going on inside the
Executive Board, there is also considerable debate outside. Academics
and NGOs, amongst others, have been key sources of alternative
analysis; however, these wider debates are barely touched upon
(in this respect, the report only touches on the Tobin Tax issue).
For example, there has been considerable debate concerning the
IMF's role and effectiveness in preventing and managing financial
crises, and in contributing to poverty reduction efforts.
There have been several occasions over the last
year when 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.
Action: 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
Action: Summarise what input has been sought
from sources outside the Treasury, eg southern governments, academics,
NGOs and the private sector, into discussions on key IMF issues
and policy formulation processes.
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 Foreign Office.
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. For example, the Government's White Paper
on globalisation calls for national road maps towards capital
account liberalisation, but it is not clear whether DFID or the
Treasury will be taking this work forward.
The report should include a list of relevant
reports, think-pieces, speeches by the minister and senior staff
and policy documents and details of how they can be obtained.
It would also be helpful if the report included references for
key IMF policy papers, research findings, new research being undertaken
etc, on the subjects discussed.
Action: Demonstrate how the Treasury is collaborating
with other government departments, such as DFID, to ensure consistency
between departments on IMF issues.
Action: Provide a summary of resources produced
by the Treasury and other government departments on IMF activities
and details of how to get hold of them.
17 January 2001