[Deuda-QdQ] [Fwd: PRSWATCH: Norwegian Conference on Conditionality;
WB and IMF Conditionality]
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PRSWATCH: Norwegian Conference on Conditionality; WB and IMF Conditionality
CONTENT:
· NEWS: Update on Norwegian Conditionality Conference
· REPORT: EURODAD and ActionAid reports on conditionality
· NEWS: March against IMF conditionality in Nicaragua
· REPORT: Politics of Aid: Conditionalities and Challenges
· REPORT: Too much, too soon: IMF conditionality and inflation
targeting
· ANALYSIS: Norway reviews IMF/WB privatization and
liberalization conditions
First highlights of the EURODAD Annual Conference
The EURODAD Annual Conference took place in Berlin on 29th to 31st
October. We are glad to report that it went well - the conference was
attended by 127 participants from 39 countries. More to come on the next
listserve!
On the meantime, please have a look at the photos in:
www.flickr.com/photos/eurodad <http://www.flickr.com/photos/eurodad>
Feel free to add tittles in the photos!
NEWS: Update on Norwegian Conditionality Conference
The Norwegian government is holding an official international conference
on economic policy conditionality at the end of November. This is a
significant opportunity for civil society groups to mobilise around to
achieve further gains on this issue. Please, find suggestions for urgent
action at the end of this section.
Norwegian political framework: The Norwegian government's new
international policy - The Soria Moria Declaration
<http://odin.dep.no/smk/english/government/government/001001-990363/dok-bn.html>
- identifies the fight against world poverty as one of the greatest
challenges facing its government today. In tackling this challenge, the
Norwegian government has recognized that not only are greater and more
sustainable volumes of development finance required in the future, but
also more effective forms of development finance. In order to ensure
better quality, the Norwegian government has adopted a progressive
stance on policy conditionality, calling for an end to tying much-needed
aid and debt relief to liberalization and privatization reforms in poor
countries.
The contested effects of economic policy conditionality attached to the
World Bank (WB) and the International Monetary Fund (IMF) development
lending have attracted a welter of criticism giving place to an ongoing
debate about how conditionality should be applied, and what it should
comprise. The WB and the IMF have recently conducted reviews of their
use of conditionality, and have drawn up new guidelines and best
practices. However, one year on from the reviews, even if the WB
reported substantial change in economic policy conditionality[1]
<#_ftn1>, some NGOs have assessed limited impact of the review[2]
<#_ftn2> and some governments - like the UK and Norway -are concerned by
lack of progress on the ground, and have commissioned their own research.
Information on the Conference: Within this context, the Norwegian
government has convened an inter-governmental conference on 28 and 29
November 2006 bringing together development officials from Sweden,
Denmark, Finland, the UK, Canada, Germany and The Netherlands to discuss
more appropriate and effective development finance conditionality for
the future.
The main objective of the conference, as stated by the Norwegian
government, is to provide insight into:
o Current IFI conditionality practice, including the latest policy
changes
o The need for conditionality and how it should be developed,
formulated, monitored and enforced to the best effect
o The process leading to conditionality in lending programmes,
including the ownership of conditionality related to privatisation and
liberalisation
o To reach a common understanding of what constitutes necessary
and sufficient conditionality.
The conference will be divided into three parts and civil society
representatives are invited to take part in two of them. The first part
is devoted to a discussion on the research on impact of privatisation
reforms which the Norwegian Ministry of Foreign Affairs has commissioned
to provide a substantive input to the conference. There will be
contributions from officials from the WB and IMF, as well as researchers
and civil society. The second part will be a high-level panel debate
with ministers, WB and IMF representatives and one representative from
civil society. The third part is a closed session for ministers only
where the objective will be to reach a common understanding of what
constitutes necessary and sufficient conditionality in light of the
debate on the previous day.
The conference downgraded? Even if initially civil society hoped that it
would be a ministerial conference, it seems that finally it will gather
representatives from ministries at a lower level. The Norwegian
government has argued that time constraints and need for in-depth
discussion are the main reasons behind this decision. After some initial
disappointment, civil society organisations believe that this should be
taken as the starting point of a process leading up to a ministerial
conference, as well as decisive action of a number of governments
vis-à-vis the IFIs, calling to stop tying aid and debt to harmful
economic policy conditionality.
Information on the Research: The Norwegian Ministry of Foreign Affairs
(MFA) has commissioned some research on the impact of privatisation
processes implemented as a result of economic policy conditionality
attached to development lending. The research is lead by Benedicte Bull
(SUM, UiO) and Alf Morten Jerve (CMI). Four case study countries have
been selected: Bangladesh, Mozambique, Zambia and Uganda. The research
will focus on energy sector privatisation under the Development Support
Credit 3, and time allowing on trade liberalisation, in Bangladesh; WB
energy loans in Mozambique; privatisation of the Zambia's Commercial
Bank geared by the IMF PRGF; and public-private partnerships in the
water sector under the PRSC-5 in Uganda. The results of this research
will be the basis for discussions during the conference.
Participation of civil society: The Norwegian Forum for Development and
Environment (umbrella organisation of Norwegian NGO's) is coordinating
participation of civil society at the conference. There will be 30 civil
society representatives - out of the approximately 80-90 available seats
in the audience - including Norwegian, European and Southern NGOs,
mainly coming from countries whose government has been invited to the
conference (Sweden, Denmark, Finland, the UK, Canada, Germany and The
Netherlands) or case study countries which have been included in the
research commissioned by the Norwegian Ministry of Foreign Affairs
(Bangladesh, Mozambique, Uganda and Zambia).
CSO participation at the conference will be limited to the first day -
28th of November. The conference will start with a session which is
intended to discuss the results of the research and it will be followed
by a High Level Panel with governmental representatives (Erik Solheim,
Minister of International Development and another governmental
representatives yet to be confirmed), WB and IMF senior staff (James
Adams, Vice-President of the World Bank and Mark Allen, Director of the
Policy Development and Review Department at the IMF), as well as a civil
society representative (Charles Abugre, from Christian Aid).
Side events organised by civil society: Besides participation at the
official conference on 28th of November, the Norwegian Forum for
Development and Environment has planned three side events which will be
an opportunity for further discussion on the results of the research
commissioned by the MFA - and other pieces of research that some
participating NGOs have recently produced - as well as strategising for
the follow-up process to the conference. The three side events will be on:
* Monday 27th November, 12.00-16.00: Seminar on Responsible Lending.
* Wednesday, 29th November, 09.00-12.30: Seminar intended to hold a
more in-depth discussion on the findings of the conditionality
study and the case studies presented the day before. This will
allow for a broader debate and participation than that allowed by
the official conference.
* Wednesday 29th November, afternoon (time not set yet): NGO
strategy meeting. Results and follow-up to the conference will be
a major issue in a strategy meeting for NGOs present on the 29th.
The run-up and follow-up to the conference: It seems that the official
conference will not produce any concrete statement on conditionality;
but it will rather be the starting point for a longer intergovernmental
process - in the event that governments participating can galvanise the
sufficient political will and energy to pull forward the results of the
conference into a more ambitious political framework. This means that
the follow-up to the conference will be extremely important as civil
society can play a crucial role in keeping the political momentum and
putting pressure on their respective governments to commit to further
action on the need for immediate reform on IFIs economic policy
conditionality.
In order to make the most of this conference and to ensure proper
follow-up and strong political commitments, it is important that invited
governments participate at the highest possible political level and push
forward for a progressive - and meaningful -outcome of the conference.
In order to achieve this, we would like to encourage you to...
Ø Take action!
Ø If your government has been invited to the conference, contact
the invited ministry to gather information on who's planning to attend
and what policy position they are going to advocate at the conference.
Lobby to try to ensure the highest possible political representation at
the conference and a progressive political stance. We would suggest
setting up meetings and - if possible - public events to create
political momentum towards the conference.
If your country has not been invited, it is definitely still worthy to
try to gather intelligence on the policy position of your government and
its views on the conference on conditionality. In the long-run, some may
be persuadable to jump into the progressive coalition that will
eventually come out from this conference.
Key link: The Soria Moria Declaration:
http://odin.dep.no/smk/english/government/government/001001-990363/dok-bn.html
REPORT: EURODAD and ActionAid reports on conditionality
On June 2006, EURODAD published the report "World Bank and IMF
conditionality: a development injustice"
<http://www.eurodad.org/uploadstore/cms/docs/Microsoft_Word__Eurodad_World_Bank_and_IMF_Conditionality_Report_Final_Version.pdf>.
This report examines the conditions that the World Bank and the
International Monetary Fund (IMF) attach to their development finance in
the world's poorest countries. It is based on new research undertaken by
Eurodad examining World Bank and IMF lending in twenty impoverished
countries.
The report reveals that impoverished countries still face an
unacceptably high and rising number of conditions in order to gain
access to World Bank and IMF development finance. On average poor
countries face as many as 67 conditions per World Bank loan.
In addition to imposing a massive administrative burden on already
over-stretched developing governments, the proliferation of IMF and
World Bank conditions often push highly controversial economic policy
reforms on poor countries, like trade liberalisation and privatisation
of essential services. These reforms frequently contravene developing
countries' wishes, an acknowledged prerequisite for successful
development. They can also have a harmful impact on poor people,
increasing their poverty not reducing it, by denying them access to
vital services. This harmful impact has been recognised by the British
government and Norwegian government, both of which have formally
rejected tying their development aid to privatisation and trade
liberalisation conditions.
Radical reform of IMF and World Bank conditionality is needed
immediately. The World Bank and IMF need to totally re-think their
current approach to development finance policy conditionality. Recent
attempts by both the institutions to 'streamline' development finance
conditionality have failed.
ActionAid has also published this year a shadow review of World Bank
Conditionality, "What progress? A shadow review of World Bank
conditionality" <http://www.actionaid.org.uk/doc_lib/what_progress.pdf>.
ActionAid report details how the Bank fails to live up to its own
principles and has no plan to ensure their future implementation.
* Ownership: the Bank has an extremely narrow definition of
ownership, which in Pakistan has led to a large dam-building
programme being driven forward in the face of public opposition
and evidence of past failures.
* Harmonisation: Too often this means that donors link their aid to
the World Bank's Poverty Reduction Support Credit (PRSC)
conditions, rather than to implementation of a country's own plan.
* Customisation: There's evidence from countries including Uganda,
Mozambique and Benin that the Bank is still using its loans to
leverage privatisation reforms that aren't in governments' own
development strategies.
* Criticality: There is ongoing confusion amongst donors and
recipients about which disbursement criteria are in fact critical.
* Transparency and Predictability: The continuing secrecy of Bank
negotiations with borrowing governments inhibits the development
of genuine 'ownership.' In Pakistan, conditions continue to make
disbursements unpredictable, with a small delay in meeting one
trigger condition (on energy pricing) holding up disbursement of
the second PRSC loan.
Two key reasons for these failures emerge. First, the Bank has no proper
implementation plan. Many staff responsible for PRSCs weren't properly
aware of the principles or regarded them as optional. Dissemination has
been patchy, because it has relied on a small number of Washington-based
staff. No substantive changes have been made to procedures, incentives
or reporting to senior management. Second, the principles by themselves
are insufficient to act as a motor for change. The incentives within the
Bank that encourage staff to push reforms have been left unchallenged.
Key links: "World Bank and IMF conditionality: a development injustice"
http://www.eurodad.org/uploadstore/cms/docs/Microsoft_Word__Eurodad_World_Bank_and_IMF_Conditionality_Report_Final_Version.pdf
and "What progress? A shadow review of World Bank conditionality"
http://www.actionaid.org.uk/doc_lib/what_progress.pdf
NEWS: March against IMF conditionality in Nicaragua
Thousands of Nicaraguans demonstrated in the streets of Managua to call
for a more flexible implementation of IMF conditionalities by the
Nicaraguan government; thus freeing national resources to address the
needs of the country's poorest.
Currently, more than 25 IMF conditionalities constrain the investment in
education and health, as well as other basic services. These
conditionalities have also frozen the salaries of civil servants -
mainly those in the education and health sector. They also impose
ceilings on thenational budget, repayment of internal debt with funds
available through debt relief, and impose rise of prices in services of
general economic interest - such as electric energy - currently
controlled by foreign companies (i.e. the Spanish Unión Fenosa).
For more information, please go to: http://www.ccer.org.ni
<http://www.ccer.org.ni/>
Source: in Managua, Giorgio Trucchi from UITA - Secretaría Regional
Latinoamericana (Uruguay).
REPORT: Politics of Aid: Conditionalities and Challenges
Voices for Interactive Choice and Empowerment (VOICE) - a research and
advocacy organisation working around issues of corporate globalization
based in Dhaka - published on September this year the report "Politics
of Aid: Conditionalities and Challenges".
This report critically analyzes the politics of aid and the aspects of
political economy in relation to aid and conditionalities. The paper
also discusses the reform agenda tied with aid such as economic reform,
trade liberalization and privatisation, which put negative impact over
people's life and livelihood. It delineates the politics of donors over
aid to the developing countries and also describes the impact of aid
conditions on Bangladesh's economy.
The report can be used as an important campaign material against the
neo-liberal economic hegemony and also against bilateral and
multilateral impositions that impede the development process of a
country like Bangladesh.
Key link: www.voicebd.org <http://www.voicebd.org/>
REPORT: Too much, too soon: IMF conditionality and inflation targeting
Bretton Woods Project has recently published the article "Too much, too
soon: IMF conditionality and inflation targeting"
<http://www.brettonwoodsproject.org/article.shtml?cmd%5b126%5d=i-126-5c6aabfccc0b8c439a34b25a9a24ab31>
by Gerald Epstein, co-director of the Political Economy Research
Institute at the University of Massachusetts.
The author finds that despite little evidence of the success of
inflation targeting in promoting economic growth, employment creation or
poverty reduction, the IMF is increasingly using loan conditions and
technical assistance to push its use. The article points that there is
an urgent need for viable alternatives that focus on employment
generation, poverty reduction, export promotion and investment
enhancement to be given more attention.
Key link: "Too much, too soon: IMF conditionality and inflation targeting"
http://www.brettonwoodsproject.org/article.shtml?cmd[126]=i-126-5c6aabfccc0b8c439a34b25a9a24ab31
<http://www.brettonwoodsproject.org/article.shtml?cmd%5b126%5d=i-126-5c6aabfccc0b8c439a34b25a9a24ab31>
ANALYSIS: Norwary reviews IMF/WB privatisation & liberalisation conditions
On the occasion of the Norwegian conference on conditionality to take
place at the end of November 2006, the Norwegian Ministry of Foreign
Affairs (MFA) has commissioned some research on the impact of
privatisation processes implemented as a result of economic policy
conditionality attached to development lending. The research is lead by
Benedicte Bull (SUM, UiO) and Alf Morten Jerve (CMI). Four case study
countries have been selected: Bangladesh, Mozambique, Zambia and Uganda.
Below you can find the preliminary findings of this research - by
Benedicte Bull.
The political platform of the Norwegian coalition government that
entered power in 2005 (the Soria Moria declaration), includes the
formulation that "Norwegian aid shall not support programs that are
conditioned on liberalization and privatization." One main target of
this formulation was the World Bank and the IMF and their long-standing
practices of advocating requirements of privatization and liberalization
as conditions for loans, grants and debt-relief. However, there is
significant discrepancy between Bank and Fund's own view of their
current use of conditionality, and the views held by other stakeholders,
such as civil society organizations. With this background a 3 person
team, (led by the author of this note) was identified in August 2006 by
the Norwegian Ministry of Foreign Affairs with the mandate to conduct a
study on the extent to which the Bank and the Fund still use
conditionality to put undue pressure on governments to privatize and
liberalize, and whether they have implemented the good practice
principles (GPPs) to a sufficient extent. The mandate did not include
the evaluation of results of liberalization/privatization policies. The
study should be based on a review of existing material and four in depth
case studies of selected processes in borrowing countries, done by
external consultants coordinated by the respective Norwegian embassies.
The case studies chosen were the Development Support Credit 3 in
Bangladesh, two electricity sector loans in Mozambique, the fifth
Poverty Reduction Strategy Credit (PRSC5) from Uganda and the current
Poverty Reduction and Growth Facility (PRGF) in Zambia.
In addition to this material, the team has conducted a review of
privatization and liberalization conditionality in 40 recent PRGFs and a
sector review of World Bank/IMF policies on public utilities,
agriculture, trade and social sectors (health and education). The first
was included due to the scarcity of such reviews of PRGFs (in contrast
to PRSCs). The second was done in order to make up for the strong focus
on energy sector reform in the case studies.
Initial findings
The report will be finalized in time for a conference on conditionality
convoked by the Norwegian government at 28-29 November. Thus, there are
presently no final conclusions. However, the following seems to be among
the findings:
The sector reviews show that there are significant changes in the policy
goals of the IFIs and the methods used to achieve them, but the degree
of change varies across sectors. The most significant changes are found
in the social sectors (health and education), where policy
recommendations on user fees are reversed. With regards to public
utilities, the Bank is significantly more pragmatic in the consideration
of policy options than it used to be although still exploring ways to
increase private participation in the provision of services. In trade,
the basic thrust towards liberalization continues, although changes are
made due to changes in the global context as well as prior progress
towards liberalization at the country level.
The quantitative review shows that privatization conditionality still
figures in a majority of recent (2002-2006) PRGFs, although it varies
across regions and has declined slightly over the last four years.
A preliminary analysis of the case studies shows a great deal of
variation regarding current Bank and Fund practices. They range from
outright pressure to privatize through the use of conditionalities found
in one case, to another case where privatization was found to have
played a minor role and where absolutely no such pressure was observed.
In between are one case where the IFIs have relied on more subtle means
of influence than the use of conditionalities, and one case where the
Bank relatively easily accepted the government's reversal of its
decision to privatize.
In all cases, there are reports on some changes in IFI practice. There
are also reports of the emergence of a new "donor dynamic" in which the
image of the IFIs as the "predatory" institutions imposing their view on
poor countries increasingly is becoming obsolete, but where nevertheless
much of the development of national development policy takes place
within the theoretical and institutional frames set by various donors in
different relations to multiple national actors.
By Benedicte Bull, Centre for Development and the Environment (SUM),
University of Oslo.
EURODAD welcomes suggestions of research reports, campaign actions,
meetings etc to announce on this list. Please send brief summaries of
long texts, and links to where they are available on-line. If you have
problems downloading from the web and would like to receive mentioned
documents as an e-mail attachment, please contact us. New subscribers
can sign up via the EURODAD website:
www.eurodad.org/aboutus/default.aspx?id=227.
<http://www.eurodad.org/aboutus/default.aspx?id=227.>
Please send any comments or queries to aidwatch en eurodad.org
<mailto:aidwatch en eurodad.org>. Forward this bulletin to all who may be
interested.
Thanks!
Nuria Molina
European Network on Debt and Development
Tel: +32 2 543 90 68
Subscribe to our two regular e-bulletins, Debt-watch and PRS-watch:
www.eurodad.org/aboutus/default.aspx?id=227
<blocked::http://www.eurodad.org/aboutus/default.aspx?id=227>
EURODAD is a non-profit organisation based in Belgium. For a list of
member groups across Europe see: www.eurodad.org/members/default.aspx
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---------------------
Nuria Molina-Gallart
Policy and Advocacy Officer
European Network on Debt and Development
Tel: + 32 2 543 9062
Skype: eurodad-nuria
www.eurodad.org <http://www.eurodad.org>
EURODAD is a non-profit organisation (ASBL/VZW) registered in Belgium
and the Netherlands.
For a list of EURODAD member organisations across Europe, or to find out
how to join, see: www.eurodad.org/members/default.aspx
<http://www.eurodad.org/members/default.aspx>
------------------------------------------------------------------------
[1] <#_ftnref1> World Bank, July 2006. "Development Policy Lending
Retrospective". Link:
www-wds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2006/07/14/000012009_20060714104555/Rendered/PDF/367720rev0pdf.pdf
[2] <#_ftnref2> Eurodad, July 2006. "World Bank and IMF conditionality:
a development injustice". Link:
http://www.eurodad.org/articles/default.aspx?id=711 and ActionAid,
September 2006. "A Shadow review of World Bank conditionality". Link:
http://www.actionaid.org.uk/doc_lib/what_progress.pdf
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