Continent Wants Greater Voice at IMF
(Nalisha Kalideen)--Civil society in Kenya has urged the International Monetary Fund (IMF) for greater representation within its decision making boards and the formation of a dispute resolution body
This comes after the IMF announced that it would step up lending to low income countries at zero interest until the end of 2011 to combat the impact of the global recession. As part of the process of drafting a summary of civil society recommendations on IMF governance reform, New Rules for Global Finance has conducted dialogues with various civil society organisations (CSOs) across the globe. New Rules for Global Finance is a coalition of development, human rights, labour, environmental and religious organisations dedicated to the reform of global financial structures.
In 2008 the IMF laid out a four-pillar approach to reforming its governance structure. This included a working group of IMF executive directors; a committee of eminent persons; and the fourth pillar involved the direct interaction with civil society organisations.
Peter Gakunu, the former executive director of the IMF’s Africa Group One, a constituency representing 21 English-speaking African countries on the board of the IMF, and former advisor in the Office of the President in Kenya, called for greater representation of African countries on the board of the IMF. He said that Africans were still under-represented at the level where vital decisions are currently being made. ‘Developing countries, particularly in Africa, think the level of representation where crucial decisions are being made is inadequate. And to have a situation where Africa is represented by only two executive directors is unfair.’ He also called for greater African representation among IMF staff. ‘Staff in the fund are very influential in terms of policies and African staff are very under-represented. We require a way to increase the level of participation of Africans,’ Gakunu said.
Africa previously had only two executive directors on the IMF board who represented sub-Saharan African countries with three percent of contributing votes. It has only recently acquired a third seat. In comparison, the executive directors of the United States have just over 16 percent of votes. This disparity is despite the fact that Africa accounts for a quarter of IMF membership and accounts for the bulk of the IMF’s operations.
Gakunu called for greater transparency in the lending conditions made by the IMF. ‘There should be a more consultative way of reaching a framework. At the moment conditions for lending are discussed with the treasuries of countries without the wider consultation of the public and there sometimes may be some intimidation and thumb-twisting that takes place,’ Gakunu said. He admitted that reform was also needed on a country level, as some countries that received funding from the IMF were not willing to disclose the conditions of their loans. Eve Odete from Oxfam said it was apparent that the IMF needed to embrace change and to also change its lending policies. ‘The evidence out there is that this conditionality is strangling Africa’s economies.’
The New Rules draft document of recommendations stated that there was a consensus among CSOs to change the scope and nature of conditionality. ‘These conditions are the root of the "stigma" attached to IMF loans, which led many emerging market countries to repay loans early and thereafter to self-insure - a practice which contributed to the financial crisis,’ the document stated. The document also stated that transparency was a major concern for CSOs: ‘With the exception of narrow and explicit exclusions for market sensitive information and personnel matters, all documents of the IMF should be presumed to be public.’
In March, IMF chief Dominique Strauss-Kahn admitted that the Fund’s policy advice had not always been correct. He admitted that in the past the Fund had not only sought to lend money but to also felt it should fix what it saw as ‘problems’ within the country it was lending to. He had promised more streamlined lending conditions. Later that month the IMF changed its lending policy to make borrowing easier and created a new line of credit for well-run economies.
CSOs in Kenya also expressed concern that the global financial crises handed the IMF a new lifeline. In May an increased number of African countries hit by the global economic crisis turned to the IMF for funding. IMF statistics showed funding for Africa was 1.6 billion dollars in May, twice the level for 2008. Participants also called for the formation of an external dispute resolution body for the IMF. This complaints body, the New Rules draft document said should be able to contribute to lessons learned and to the design of better programs by the IMF.
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