IMF and World Bank Spring Meetings: Missing the Big Picture?

Jesse Griffiths and Tiago Stichelmans, Guest Bloggers

The IMF and World Bank spring meetings, which used to be a major forum for global economic decision making, end today with few concrete outcomes, the Bank under fire for its human rights and environmental record, and the IMF still unable to make any progress on reforming its creaking governance structure.

Finance ministers and central bankers from all over the world met in Washington DC this week for the IMF and World Bank spring meetings. The concerns caused by slowing growth in emerging market economies, collapsing commodity prices, and uncertainties over the future of monetary policies in the developed world were very real. Action to deal with them was not. Instead, all the IMFC – the ministerial committee that oversees the IMF – could promise was “vigilance” when dealing with “large shifts in exchange rates and asset prices, protracted below-target inflation in some economies, financial stability concerns, high public debt, and geopolitical tensions”.

The centrepiece of discussions for this year’s meetings was supposed to be the critical upcoming United Nations summit on Financing for Development (FfD), slated for July in Addis Ababa. However, the background document prepared by the World Bank and five regional development banks did not tackle the breadth of structural issues that are on the FfD agenda. It reads more like a prospectus for increasing use of the banks that authored it.
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The G20 in 2015: What’s the Plan?

Jesse Griffiths, Guest Blogger

Jesse Griffiths is Director of the European Network on Debt and Development (Eurodad).

Last weekend, G20 Finance Ministers met in Turkey, and although the resulting communiqué covers a whole host of issues, it is becoming clear that two areas dominate in terms of actual work planned this year: infrastructure financing and financial sector reform.

As Eurodad noted in our scorecard analysis of the G20’s work last year, infrastructure has featured prominently on the G20’s agenda, particularly its push to harness private financing for infrastructure. Actual concrete initiatives have been limited: a tiny Global Infrastructure Hub with an information sharing mandate was the underwhelming centrepiece of last year’s G20 Global Infrastructure Initiative.

However, the underlying efforts to set a new agenda for infrastructure financing continue to be significant, driven by the World Bank and the Organisation for Economic Co-operation and Development (OECD). Existing agendas include the promotion of the idea of an ‘infrastructure asset class’ for institutional investors such as pension funds to invest in – despite the fact that there is very little evidence of any appetite for this – and a push to promote public-private partnerships (PPP), with only limited recognition of their chequered history.

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The World Bank: In the Vanguard of an Infrastructure Boom

Nancy Alexander, Guest Blogger

The world is experiencing the “biggest investment boom in human history”, with some $6-9 trillion annually (8 per cent of global GDP) devoted to mega, giga and tera (million, billion, and trillion) dollar projects.

World leaders, specifically the Group of 20 (G20), are staking their reputation on achieving a growth target – namely raising global GDP by 2.1 per cent over current trajectories by 2018. The G20 sees massive infrastructure investment as one of the ‘silver bullets’ that can achieve its target and, by boosting trade and integration, add $2 trillion to the global economy and create millions of jobs.

The private sector, a major driver of the boom, suggests that about $60-70 trillion of additional infrastructure capacity will be needed by 2030 (see Business 20 recommendations). Under current conditions, public and private investments could provide about $30-35 trillion and $10-15 trillion, respectively, leaving a gap of $15-20 trillion. Policy-makers see long-term institutional investors, such as pension funds and sovereign wealth funds, as the key to bridging the gap. These investors control about $85 trillion and seek higher returns on their money, such as infrastructure can provide.

Another major driver of the boom is competition between the ‘West and the rest.’ As described below, the US-led World Bank is one of the institutions in the vanguard of this competition.  When Jim Yong Kim assumed the World Bank presidency in 2012, staffers reported that he was presented with “Big Development” and “Small Development” approaches.  Kim leans toward “Big Development” – or “transformational” projects.

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A New Dawn for Climate Finance as Climate Investment Funds Sunset?

Petra Kjell, Guest Blogger

Petra Kjell is the Programme Manager for Environment, Human Rights, and Social Impacts at the Bretton Woods Project.

This week, the Green Climate Fund (GCF) gathers in Barbados for the eighth meeting since its inception. Established in 2010 under the UN Framework Convention on Climate Change (UNFCCC) as the primary vehicle to deliver much needed climate finance, the GCF still has a number of issues to resolve until it becomes fully operational. Slow in motion, the fund received a much needed boost with some pledges during the September climate summit organised by UN Secretary-General Ban Ki-Moon.

As the new financial structure for climate action rises, another funding mechanism is due to sunset. The World Bank-hosted Climate Investments Funds (CIFs) were set up in 2008 in the shadow of the ongoing UNFCCC process as an interim measure to provide new and additional climate finance to pilot “transformational” actions in selected developing countries. Led by developed countries and implemented by multilateral development banks (MDBs), four funds were set up: the Clean Technology Fund (CTF), the Pilot Program for Climate Resilience (PPCR), the Forest Investment Program (FIP) and the Scaling up Renewable Energy Program for Low Income Countries (SREP).

The CIFs were quickly criticised by civil society groups as undemocratic and unaccountable, potentially undermining the official UN process. The leading role of the World Bank, tarnished by its reputation on many fronts, including for its funding of fossil fuels, also created a widespread mistrust of the funds. A few years down the line, civil society has complained about lack of consultation, misguided projects, and a heavy private sector focus. In Indonesia, for example, civil society groups have repeatedly raised concerns about the CIFs, such as lack of consultation on the FIP country investment plan and the risk of deforestation linked to CTF geothermal projects, but with little impact. With CIF-funded projects ranging anything from energy efficient fans in India to airport development in the Caribbean, CIF donors have also repeatedly raised questions on the legitimacy of projects for CIF funding , but few projects have gone back to the drawing board, let alone been stopped.

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Rigged Rules: A Rogue Corporation in the World Bank’s Rogue Tribunal

Robin Broad and John Cavanagh

On September 15, in a tribunal that few know exists, the fate of millions of people and hundreds of millions of dollars will be debated and decided in the next six months.

The tribunal is the World Bank Group’s International Centre for Settlement of Investment Disputes (ICSID). It sits in downtown Washington, D.C., behind security guards at the World Bank. At issue is the future of El Salvador, some 2,000 miles away, where a global mining company—Pacific Rim, now owned by Australian/Canadian corporation OceanaGold—wants to mine gold in ways that could well poison the river system serving over half the Salvadoran population.

The crime alleged by the mining company is that the government of El Salvador has not approved a mining license for it. But the real crime is that a foreign corporation is trying to stifle democracy in a country where a small landed oligarchy and U.S. intervention stifled it for so long.

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Rigged Rules: A Rogue Corporation in the World Bank's Rogue Tribunal

Robin Broad and John Cavanagh

On September 15, in a tribunal that few know exists, the fate of millions of people and hundreds of millions of dollars will be debated and decided in the next six months.

The tribunal is the World Bank Group’s International Centre for Settlement of Investment Disputes (ICSID). It sits in downtown Washington, D.C., behind security guards at the World Bank. At issue is the future of El Salvador, some 2,000 miles away, where a global mining company—Pacific Rim, now owned by Australian/Canadian corporation OceanaGold—wants to mine gold in ways that could well poison the river system serving over half the Salvadoran population.

The crime alleged by the mining company is that the government of El Salvador has not approved a mining license for it. But the real crime is that a foreign corporation is trying to stifle democracy in a country where a small landed oligarchy and U.S. intervention stifled it for so long.

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BRICS: Toward a Rio Consensus

Kevin Gallagher

Conveniently scheduled at the end of the World Cup, leaders of the BRICS countries travel to Brazil in mid-July for a meeting that presents them with a truly historic opportunity. While in Brazil, the BRICS hope to establish a new development bank and reserve currency pool arrangement.

This action could strike a true trifecta — recharge global economic governance and the prospects for development as well as pressure the World Bank and the International Monetary Fund (IMF) — to get back on the right track.

The two Bretton Woods institutions, both headquartered in Washington, with good reason originally put financial stability, employment and development as their core missions.

That focus, however, became derailed in the last quarter of the 20th century. During the 1980s and 1990s, the World Bank and the IMF pushed the “Washington Consensus,” which offered countries financing but conditioned it on a doctrine of deregulation.
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Malawi’s Paradox: Filled With Both Corn and Hunger

Timothy A. Wise

Cross-posted from Global Post.

LILONGWE, Malawi — Visit this small, landlocked country in late January and you will have a hard time believing its people often go hungry.

It is mid-rainy season, and in and around the capital city the landscape is lush and green.

Look more closely and you’ll notice that nearly every inch of unpaved space seems planted with maize (corn); the green stalks rise up to five feet above moist, rich soil. Outside of the city, along the road leading south toward the former colonial capital of Zomba, the hills roll with maize, not in vast tracts reminiscent of Iowa but in small, neatly bordered plots.

It certainly doesn’t seem like a land that cannot feed itself. But until recently, that is what Malawi has been.

Droughts often threaten the country’s one rainy season, and with per capita incomes at around $900 per year, hunger, and even starvation, stalk the countryside. The World Food Program has permanent offices here, and for good reason.

Even this season, when the rains have come strong but late, more than 10 percent of the country’s 16 million people face severe food insecurity. According to news reports, some have starved.

It is paradoxical only to outsiders that this greenest of seasons is also the hungriest. By planting time late in the year, many peasant farmers have consumed the last of their saved grain, even following a decent harvest like they had last year. Until the new crop comes in late March or April they have to rely on meager cash income to feed themselves and their families.

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Malawi's Paradox: Filled With Both Corn and Hunger

Timothy A. Wise

Cross-posted from Global Post.

LILONGWE, Malawi — Visit this small, landlocked country in late January and you will have a hard time believing its people often go hungry.

It is mid-rainy season, and in and around the capital city the landscape is lush and green.

Look more closely and you’ll notice that nearly every inch of unpaved space seems planted with maize (corn); the green stalks rise up to five feet above moist, rich soil. Outside of the city, along the road leading south toward the former colonial capital of Zomba, the hills roll with maize, not in vast tracts reminiscent of Iowa but in small, neatly bordered plots.

It certainly doesn’t seem like a land that cannot feed itself. But until recently, that is what Malawi has been.

Droughts often threaten the country’s one rainy season, and with per capita incomes at around $900 per year, hunger, and even starvation, stalk the countryside. The World Food Program has permanent offices here, and for good reason.

Even this season, when the rains have come strong but late, more than 10 percent of the country’s 16 million people face severe food insecurity. According to news reports, some have starved.

It is paradoxical only to outsiders that this greenest of seasons is also the hungriest. By planting time late in the year, many peasant farmers have consumed the last of their saved grain, even following a decent harvest like they had last year. Until the new crop comes in late March or April they have to rely on meager cash income to feed themselves and their families.

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Foreclosing the Future: The World Bank and the Politics of Environmental Destruction

By Bruce Rich, Guest Blogger

In 2011 UN Secretary General Ban Ki-Moon shocked an audience of bankers and corporate executives in Davos Switzerland when he declared that the current economic system was “a recipe for disaster” and “a global suicide pact.” Over the last two decades the world’s institutions have largely failed to deal with the ecological crises of climate change, destruction of species, and pollution of fresh water and oceans. These failures have been accompanied by growing economic inequality in many nations.

The vast majority of the world’s economic growth, as well as ecological destruction, is now occurring in developing countries, and it is largely in these countries where the environmental and economic future of the world will be decided. No institution has played a more influential role in this arena than the World Bank Group.

The World Bank Group proudly proclaims “our dream is a world without poverty.” It claims to be a leader in promoting environmental standards for development, as well as in finance for environmental purposes, such as mitigating climate change. In reality it is a microcosm of the failures of its 188 member countries to address the challenges of economic development.

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