IFI War on Corruption Falls Short
IFI War on Corruption Falls Short
► Spring Meetings at the World Bank and International Monetary Fund – Some Highlights
Reform of The International Monetary Fund (IMF) – As the IMF staggers through a budgetary and identity crisis (Issue Update 2, 2006), the IMF’s financial committee agreed to a number of changes to both IMF governance and its role. On governance, the Committee proposed reapportioning great voting power to fast-growing economies, such as South Korea, China, Mexico and Turkey, to reflect its place in the global economy. In terms of its role, it proposed the Fund look at how to be more effective in tackling spillover effects from individual country’s economic policies, by monitoring the impacts on the global economy of such issues as the US trade deficit, trade surpluses in Asia, and China’s pegging its currency to the dollar.
► Small Victory on World Bank Debt Deal
On March 28, 2006, the World Bank’s Board of Directors adopted the modalities for implementing its share of the Multilateral Debt Relief Initiative (MDRI), an outcome of last summer’s G-8 meeting and endorsed by the Bank and IMF at its fall meetings. The Bank deal provides for 100% cancellation of International Development Association (IDA) debt for 17 Heavily Indebted Poor Countries (HIPC).
World Bank Fund Suspension in Chad: Local Implications for AIDS Work
The Chadian government recently amended their Petroleum Revenue Management Law for the Chad-Cameroon pipeline by removing the 'future generations fund' (10% of direct oil revenues are placed in an account for future use) to be able to access more oil revenues. This was due to a recent change in national priorities in favour national security and territorial administration, away from such issues as health care. The World Bank perceived this change as unacceptable and in January 2006 suspended their $124 million loan for eight active projects in Chad (See Issue Update Vol. II, No. 1). Three days of talks between the Chadian government and the Bank ensued. The discussions covered Chad's social spending and its critical budget shortfall, as well as the increases in border security to tackle the influx of refugees coming from the Darfur region of Sudan. Despite the changes made by the Chadian government, the Bank has maintained its suspension, and plans 'to safeguard the oil revenues intended for poverty reduction programs included in its original agreement with Chad.' A way forward is not clear.
World Bank Suspends Loans to Chad for Oil Pipeline
On January 12, in a rarely seen move, the World Bank cut off funding to the Chad-Cameroon Petroleum Development and Pipeline Project pipeline. The $4.2 billion project entailed the development of the southern Chadian oil fields at Doba and the construction of a 1,070 km pipeline that begins in Chad, crosses through Cameroon, and leads to an offshore oil-loading facility on Cameroon's Atlantic coast. To address concerns about weak governance, poor budget-management experience, and setting up a major project in a recently war-torn country, the Bank had attached strict conditions to the loan. Hailed by the Bank as a pioneering breakthrough, Chad was obliged to account for its estimated $1.8 billion in oil royalties through a transparent revenue management system. As a result, in 1998 the Chadian government adopted the Oil Revenues Management Act requiring more than 80 percent of the accrued revenues to be allocated to education, health, rural development, infrastructure, environment and water, with a 10 percent long-term savings account fund to benefit future generations. But since that time, the Chadian government made fundamental changes to the law to allow for greater spending flexibility, and failed to include the Bank in the revisions. The Bank saw this change as unacceptable, and elected to suspend the $124 million loan.
Every month, the Halifax Initiative produces a two-page monthly update on various issues related to international finance. This month:
- IMF Board of Directors approve debt cancellation for 19 countries
- Guatemalans meet with World Bank President Wolfowitz about mining
- World Bank gets creative in accounting for its renewable energy investments
- New discussion papers
- Upcoming Meetings
- JUST THE FACTS - What are the IFC Safeguard Policies?
SELECTED ISSUES on INTERNATIONAL FINANCIAL INSTITUTIONS
►IMF Board of Directors approve debt cancellation for 19 countries
The IMF announced on December 21st that it would cancel the debts owed to it by nineteen highly indebted countries, early in 2006. The G8 last June had promised full debt cancellation for countries that had reached the completion point of the World Bank/IMF Heavily Indebted Poor Country Debt Initiative. (See Issue Updates 7,8 and 9, July, August and September 2005, respectively, for more info). Over the past two weeks, the IMF had threatened to delay implementation of the debt write-off for six countries on the pretext that their economic policies are "off-track" in relation to IMF conditions. Only Mauritania will have its debt cancellation delayed. It thus appears that the IMF has backed down from its threat to delay debt relief to the other countries in the face of a last-minute but intensive international campaign led by campaigners in favour of full and unconditional debt cancellation. The 19 countries that qualify as a result of today's assessment include: Benin, Bolivia, Burkina Faso, Cambodia, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tajikistan, Tanzania, Uganda and Zambia. The IMF added non-HIPC countries, Cambodia and Tajikistan, because of their low per capita income.
IMF Press Release: http://www.imf.org/external/np/sec/pr/2005/pr05286.htm
Letter to Finance Minister Goodale from the Halifax Initiative Coalition: http://www.halifaxinitiative.org/index.php/Home/653
►Guatemalans meet with World Bank President Wolfowitz about mining
Two delegates from Guatemala traveled to Washington D.C. to voice their concerns and demands regarding the Marlin mine directly to World Bank President Wolfowitz on December 9th. Glamis Gold, a US-based, Canadian registered mining company owns Marlin mine, which was built with the help of a World Bank loan. Mario Tema, an indigenous leader from Sipacapa, and Magali Rey Rosa, a representative of the Guatemalan environmental NGO, Colectivo Madre Selva formed the delegation. Mr. Tema presented Mr. Wolfowitz with a statement from numerous Sipakapense leaders, outlining their demands regarding operation of the Marlin mine. Mr. Tema also presented President Wolfowitz with a statement from the community of San Miguel Ixtahuacán. The delegate from San Miguel was unable to participate in the meeting as he was denied a US visa. Both Sipacapa and San Miguel are affected by the Marlin mine.
Halifax Initiative case study on the Marlin mine http://hi2.openconcept.ca/updir/Glamis-Final.pdf
Halifax Initiative and Friends of the Earth Canada joint statement on Marlin mine: http://www.foecanada.org/index.php?option=content&task=view&id=228&Itemid=113
►World Bank gets creative in accounting for its renewable energy investments
The World Bank revised its own figures upwards in regards to investments in renewables and energy efficiency (RE & EE), in time for the inter-governmental meetings on climate change in Montreal that ended early this month. The Bank’s latest report shows that 60 per cent of its support for renewable energy and energy efficiency (RE & EE) is in fact for big hydro projects.
The World Bank claims in a November 30 press release that it more than doubled its investment in RE & EE from fiscal year 2004 to FY 2005. The press release compares 2005 lending with its commitment to increase RE & EE support by an average of 20 per cent per year from 2005 to 2009. The Bank made this commitment at the June 2004 international conference on renewable energy held in Bonn, Germany.
The Bonn target excluded large hydro (greater than 10MW) and loans and guarantees from the Bank’s private sector and insurance arms (IFC and MIGA).
Friends of the Earth USA, Power Failure: How the World Bank is Failing to Adequately Finance Renewable Energy for Development: http://www.foe.org/camps/intl/institutions/renewableenergyreport10242005.pdf
International Rivers Network, Friends of the Earth International release: http://www.irn.org/programs/greenhouse/index.php?id=051205leap.html
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New discussion papers (HI Members or Associates, government) on IFI issues:
Power Failure: How the World Bank is Failing to Adequately Finance Renewable Energy for Development - http://www.foe.org/camps/intl/institutions/renewableenergyreport10242005.pdf
Comments submitted by stakeholders on the revised IFC Safeguard Policies http://www.ifc.org/ifcext/policyreview.nsf/AttachmentsByTitle/November+25+Stakeholder+Comments/$FILE/60+day+Comments+All.pdf
Upcoming IFI-related conferences or meetings
World Social Forum, end of January 2006 in Bamako, Mali, Caracas, Venezuela and Karachi, Pakistan.
JUST THE FACTS – Safeguard Policies
The policies were developed at the World Bank Group, largely due to donor and NGO pressure to reduce the social and environmental consequences of World Bank lending. The objective of these policies is to prevent and mitigate undue harm to people and their environment. These policies provide guidelines for bank and borrower staffs in the identification, preparation, and implementation of programs and projects. World Bank Group Safeguard Policies include policies on environmental assessment, indigenous peoples, cultural property, forests, pest management and involuntary resettlement. The government lending arms of the World Bank Group and the private sector lending arm have different standards and different accountability mechanisms.
For more information see: http://www.ciel.org/Ifi/IFIs_Social_Environmental.html
US Congress passes new law aimed at increasing World Bank accountability
Legislation to encourage greater transparency and accountability at the World Bank and other multilateral development banks (MDBs) was signed into law by President Bush, November 14, 2005. The reforms were contained in an amendment to the 2006 foreign operations appropriation bill proposed by Republican Sen. Richard Lugar, chair of the Senate Foreign Relations Committee, as part of the FY06 Foreign Operations appropriations bill.
Stale Government Response to SCFAIT Mining and Human Rights Recommendations
"Balderdash!" summed up New Democratic Party MP Ed Broadbent's thoughts on the government's response to a set of recommendations made by the Standing Committee on Foreign Affairs and International Trade (SCFAIT) on the issue of Mining and Human Rights. Although the Government's response, released October 18th, acknowledged a need for action to address the often devastating impacts of the mining sector, it dismissed the majority of the Committee's recommendations. Citing a number of challenges that prevent more concrete action, the government focused on purely voluntary measures.
G8 Debt Proposal gains support at World Bank/IMF Annual Meetings
The World Bank and International Monetary Fund (IMF) have advanced a plan for cancelling debts owed by 18 low-income countries, at their September 23-25, 2005 annual meetings. The plan, first proposed by the Group of 7 (G7) Finance Ministers last June and then ratified by G8 (G7 plus Russia) heads of government at their July Summit in Gleneagles, Scotland, applies only to those countries that have graduated from the Heavily Indebted Poor Countries (HIPC) Initiative (See Issue Updates July and August 2005, respectively, for more). It would cover 100 % of their debts owed to the World Bank's International Development Association (IDA), the IMF and the African Development Bank's African Development Fund (AfDF).
A leaked internal audit assessing the World Bank's involvement in a controversial Canadian gold mine in Guatemala has