Developing nations left the weekend's joint meetings of the World Bank
and International Monetary Fund (IMF) with few gains, while the rich countries
that dominate the boards of the two lenders managed to shape the agenda almost
entirely to serve their own interests, say analysts here.
The focal points of this semi-annual meeting were the proposed reforms for
the IMF, an anti-corruption drive led by World Bank president Paul Wolfowitz
and a new global energy investment plan.
Issues centred on developing countries, like debt cancellation and aid -- a feature
of past meetings -- had limited airing during this gathering.
"Compared to the momentum last year and the real changes in terms of increase
in aid and debt cancellation, the spring meetings were a real disappointment,"
said Max Lawson, policy adviser at Oxfam International,
a confederation of anti-poverty organisations.
The International Monetary and Financial Committee (IMFC), the steering body
of the IMF, approved the "Medium-Term Strategy", a plan that grants
the Fund further authority to carry out "multilateral surveillance".
This means the lender could sharpen its teeth as a watchdog of global current
account imbalances, surpluses in some countries, deficits in others and trade
Faced with increasing doubts in developing nations over its credibility and
legitimacy, the IMF will therefore will have a mandate to report on threats
to the global economic structure, such as high oil prices and financial sector
The ones that stand to benefit are rich nations, especially the United States,
which has insisted that other countries and institutions press China to allow
its currency to appreciate.
Washington hopes that this will make the U.S. dollar cheaper and U.S. goods
more affordable, while at the same making Chinese exports more expensive and
less attractive U.S. consumers -- and help cut the U.S. trade deficit.
The IMFC also asked IMF managing director Rodrigo de Rato to work out the details
of a plan to shake up voice, votes, and quotas at the 184-member IMF to "reflect
the changing international economic weight of countries in the global economy,"
a move that is expected to give powers like China and South Korea greater say.
Rato will have to submit his plans for agreement at the IMF and World Bank
annual meetings to be held in Singapore in September.
Here, too, the purpose appears to be a bid to pre-empt East Asian countries'
attempts to steer away from the Fund and escape its influence. Industrialised
countries want to keep the IMF's clout over developing nations intact since
it has acted as one of the channels of their global economic influence.
"They (IMF) were the big enforcer of a very powerful creditors' cartel,
and that's almost broken down completely for the middle-income countries, and
it is not nearly as relevant in the low-income countries," said Mark Weisbrot,
co-director of the Centre for Economic and Policy Research in Washington.
"So that's what they are trying to figure out: how to make it relevant
again and do the things that really matter to the G7 (Group of Seven most industralised
nations) and the U.S., most importantly," Weisbrot said.
But long-time observers of the IMF and World Bank say that even with some voice,
the harm done by the IMF to the economies of poor nations will hardly ebb as
long as it continues its policies of excessively low inflation and deficit ceilings
required of borrowing nations to remain eligible for loans.
The international advocacy group ActionAid
says these ceilings prevent countries from hiring the teachers and health workers
they desperately need, lest their salaries result in inflation hikes or larger
"What this means is that sovereign nations are prevented every day from
determining how they can spend their money," said Rick Rowden, an ActionAid
international policy analyst.
"Instead of being accountable to the needs of their population, leaders
are beholden to the unyielding demands of unelected IMF bureaucrats who are
more concerned with keeping inflation unnecessarily low rather than putting
children in school," he added.
At the Saturday-Sunday meetings, finance ministers and central bank governors
approved a new World Bank energy investment framework, a plan designed to promote
greater use of cleaner and more efficient energy sources in developing countries
to address global warming and climate change.
As in previous energy pronouncements by the Bank, the paper calls on poor nations
to continue to privatise their energy resources and assets and sell them to
oil and energy companies with the argument that it will help meet their energy
The Bank is often criticised for orchestrating the global march towards transferring
asset ownership from developing countries to corporations in rich nations or
to the pro-Western local elites.
Watchdog groups point out that the World Bank's energy strategy recommends
the adoption of untested coal technologies, nuclear power, and large hydropower
projects as solutions to global warming, while giving little attention to renewable
"The needs of the poorest, who are least responsible for climate
change, are once again being sacrificed in favour of an energy and development
model that primarily serves the wealthy," said Daphne Wysham, a fellow
with the Washington-based Institute for Policy
Studies, which, like most development-focused NGOs, favours a shift towards
renewable energy and to community-centric energy security programmes.
Another issue sounded at the meeting was World Bank president Paul Wolfowitz's
insistence that he should be the one heading a new crusade against corruption.
But while his endeavor this time won Wolfowitz some praise from traditional
Bank critics within NGOs, it was criticised during the meetings, this time surprisingly
by European officials who said Wolfowitz was overly stressing corruption-fighting
at the expense of poverty reduction in developing nations.