Each spring, committees of the World Bank and International Monetary Fund (IMF) Board of Governors gather in Washington, DC. This year, because of the global financial crisis and the $1.1 trillion in resources for low-income countries promised at April’s G20 Summit in London, the meetings were of critical importance to developing countries. This was essentially the first chance for international financial institutions to follow through and take specific action on the promises made the G20.
On 26 April, we headed to the final portion of the meetings where the World Bank and the International Monetary Fund Joint Development Committee gathered to discuss how the global economic crisis is impacting developing countries specifically.
The Development Committee and the IMFC released communiqués laying out their recommendations for action. Overall, a few positive recommendations were made, but we have yet to see a comprehensive, grand plan to protect the world’s poorest people from the fallout of the financial crisis.
ONE, along with others in the development community, requested that the Bank “frontload” funding to low income countries and the Development Committee communiqué indicates that this may happen. Frontloading International Development Association (IDA) funding commitments means that the World Bank will have the resources to provide funding to low income countries now in larger bundles over smaller periods of time, rather than spanning it out until 2011. This is critical in order to ensure that development projects already underway can be completed and new projects that help the poor can be implemented.
The IMFC communiqué recommended that the IMF increase its lending capacity for poor countries, and agreed to explore the idea of giving better terms for low income countries on their lending. However, it did not specify how far the IMF will go with this. This is something we have to watch for as IMF loans can come with burdening economic conditions and this has the potential to lead to a new debt crisis. ONE are advocating for African countries to be given strong representation because, after all, institutions like the World Bank and IMF have a very large impact on their development and it’s only right that these nations have a say.
Overall the weekend was very productive, but there is still plenty of work to do in the coming weeks and months. The anti-poverty campaigner Bob Geldof delivered a petition from ONE members to IMF Director Dominique Strauss-Kahn with over 60,000 signatures. ONE members around the world put forward an exceptional effort trying to convince the IMF to sell a small amount of their gold reserves to help developing countries hit hard by the financial crisis.
So although the IMF hasn’t yet delivered what we asked for, in meetings with ONE staff they confirmed that they are actively looking at options to increase resources for low-income countries and are exploring ways of ensuring that provision of new resources does not lead to a debt problem for Africa in future years. The process is still moving along and we won’t let up pressure until we get the right outcome for Africa.