DRAFT CIVIL SOCIETY STATEMENT: (comments to [email protected] [2])

Open statement on steps to democratize the World Bank and IMF Following theMonterreyconference on Financing for Development a number of official discussions are underway about changing the governance regime of important international institutions. Civil society organisations, researchers, parliamentarians and others have long pointed out the problems with the legitimacy and effectiveness of these institutions. The undersigned organisations and individuals hereby put on record a statement of the problems with World Bank and IMF governance and demands for minimum steps to improve it.

1) REBALANCING BOARD COMPOSITION AND VOTING POWER The Executive Boards of the World Bank and IMF do not give all countries an equal opportunity to represent themselves. Seats and votes are allocated to countries according to their economic size or historical significance. The 46 Sub-Saharan African countries have just 2 Executive Directors on the Bank and Fund Boards to represent them all, while 8 countries have a single Executive Director each.TheUSAhas a veto on decisions requiring a super-majority. The rich country governments currently control 62 per cent of the votes at the World Bank and 67 per cent of votes in the IMF.Because of the increasing volumes of repayments of past loans the Bank is far less reliant on rich country funding than before and the Fund’s resources are a far smaller proportion of world trade.

We demand that:
There be a reallocation of Board seats and votes to ensure that all member countries are fairly able to represent themselves and that creditor and borrower countries have an equal allocation of votes; There should be no more than 10 countries per constituency and rotation should be introduced to ensure that no country has a permanent place at the Board table; The share of developing country votes should be increased so that developing countries attain a combined vote of around 50%; No one country should have a veto on any decisions.

2) MAKING GOVERNING BODIES TRANSPARENT The World Bank and IMF have made some useful progress in recent years in the transparency of some of their documentation. This has not, however, extended to the Boards of the institutions. We believe that, as these institutions make important decisions which affect the welfare of people across the world, people have a right to know what positions their representatives are taking within their governing structures.

We demand that:
a. the agenda and minutes of World Bank and IMF Board meetings be published so that parliamentarians, civil society groups, academics and others can see who is taking what positions at these important institutions. Exceptions to this important principle should be narrowly drawn and based on a clear indication of harm that would result from non-disclosure.
b. Board members should express their position with formal votes rather than informal indications of position whenever possible.

3) OPENING LEADERSHIP SELECTION The leaders of the World Bank and IMF are extremely important in setting their institutions’ agendas, chairing their boards and representing them publicly. The leaders are currently selected in an non-transparent process which limits applications on the grounds of nationality. The European countries nominate the Managing Director of the IMF while theUSAnominates the President of the World Bank and the Deputy Director of the IMF. This is very damaging, both in perception and reality. We welcome the minor steps agreed recently to improve the selection process but consider that they have not gone nearly far enough.

We demand the introduction of a transparent process for selecting the heads of both organizations. This should involve all member countries and significant stakeholder groupings and assess candidates on merit, regardless of their nationality. In fact geographical diversity in top positions should be actively encouraged.