IMF, WORLD BANK CARRY ON MEETING EVEN WITH PROTESTS. The Washington Post (p.A07) reports that conferring in a third-floor room at the barricaded Fund headquarters on 19th Street on Sunday, the International Monetary and Finance Committee put the stamp of approval on steps the IMF contends will address many of the concerns of poverty that its critics raise. The committee also urged member countries and governments to speed up the program to forgive up to $28 billion in debt owed by desperately poor nations, and said rich countries should help out by lowering trade barriers. "It would be more coherent when you're giving debt relief to also allow expanded access" for poor countries' products to markets of the industrialized world, said acting IMF Managing Director Stanley Fischer.
As part of an internal restructuring, the Fund is phasing out four types of loans, a move that was endorsed by the IMFC. The committee also lauded steps to tighten the auditing of central banks that borrow from the Fund, and promised to continue opening up IMF operations to outside scrutiny, primarily through publication of formerly confidential documents.
The IMF would work to improve oversight of world economic trends, the committee said. The surveillance is intended to allow action against financial panics before the occur by quickly identifying currency flows and other trends that signal trouble.
Behind the scenes, says the Australian Financial Review, the US, in response to Congressional critics, has won agreement from Europe and Japan for major reforms to the IMF's lending practices.
Writing in a letter to the editor of the Financial Times (p.18), Oxfam Advocacy Director Phil Twyford says in response to a recent article by Martin Wolf that the demonstrators in Washington, as they did in Seattle last year, are protesting about the failure of world institutions to make globalization and growth work for the poor. Destroying the IMF or the World Bank is not the answer, but changing their policies is. The Fund is often used as a "battering ram" for US interests. While poor countries are making efforts to reform their economies, their efforts are undermined by wealthy countries' trade barriers. The poor cannot benefit from trade when their products are effectively barred from US and EU markets.
Meanwhile, a Washington Times editorial says at issue are the lending practices of international lending institutions like the World Bank and the IMF. It's a perfectly legitimate complaint, but the question is the best way to make the complaint. Breaking the law, blocking streets, and threatening police officers is definitely the wrong way.
Bank staffers insist that their programs are now heavily weighted toward community-based projects, planned in cooperation with local authorities and in such sectors as health and education. Officials at both the Bank and the Fund bristle at suggestions they are indifferent to the plight of the poor, pointing to the joint initiative that ties debt relief to poverty reduction.
The Wall Street Journal reports that while anti-globalization protesters demanded abolition of the International Monetary Fund and World Bank, the folks with the money inched toward reform, not revolution, in the way the lenders deal with developing nations.
Finance ministers and central-bank governors from the world's wealthiest nations generally endorsed Treasury Secretary Lawrence Summers's ideas about how to remodel the IMF to prevent and shorten financial crises in developing countries and how to focus the World Bank on combating poverty and disease.
"Crisis prevention and response should be at the core of the IMF's work," officials of the Group of Seven said in their closing statement Saturday, echoing Summers's argument that, in better-off developing countries, the IMF should focus its lending on short-term emergencies, leaving long-term development largely in the hands of the World Bank.
The meeting was held as thousands converged on Washington for days of demonstrations to demand radical changes in IMF and World Bank lending or, as many urged, an end to it. Their demands, echoed by some lawmakers on both sides of the aisle in Congress, are putting pressure on Summers to secure convincing reforms from the other major IMF and World Bank member governments.