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Contributions from
the Column
Facts and trends
The FAO adopts guidelines
The reality of development aid
IMF evaluation of capital market liberalisation
Kenya produces generic AIDS drugs
UN Report: fewer conflicts in Africa
Computers for the poor
“In Afghanistan, donors must do more
to support the private sector”
Debt relief stays on the agenda
11/2004
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[ World Bank and IMF ]
Debt relief stays on the agenda
“This weekend saw a lot of words from rich country leaders about the need to drop the debt. Now they must put their money where their mouth is.” This was the comment made by Oxfam’s spokesperson, Caroline Green, on the annual meetings of the World Bank and the International Monetary Fund in Washington in October. Further debt-reduction does, in fact, appear to be on the agenda. According to German Development Minister Heidemarie Wieczorek-Zeul, “the discussion went very well”. However, the US suggestion to cancel the multilateral debts of the poorest countries was not endorsed by the boards of the Bank and the Fund. In the long term, it would result in the World Bank running out of resources to support the poorest countries. There was also resistance to the British proposal that the rich countries, who call the shots in both organisations, should service the debt in proportion to their shares they hold in the multilateral institutions. Several Finance Ministers – including Wieczorek-Zeul’s cabinet colleague, Hans Eichel – expressed their opposition.
Wieczorek-Zeul says one should understand that many details still need to be worked out. She did, however, stress promising signs. For instance, the British proposal to raise funds on international bond markets by having rich countries pledge future increases in their development budget, was “viewed as positive”. Other unconventional options, such as a global environmental tax, were also discussed. The general consensus, according to the German Minister, was that more resources are needed to fight poverty.
Gradual progress was also being made in a different sphere. World Bank President James Wolfensohn and IMF Managing Director Rodrigo de Rato both complained that representation on their boards no longer reflected the current world situation. Poor countries are not adequately represented. No resolution was reached, however, on how to recruit the heads of both institutions. Traditionally, a European leads the IMF, and a US citizen the World Bank. Non-governmental organisations are demanding an open and transparent process. Wolfensohn is nearing the end of his second term in office. In the absence of new rules, the current procedure will be used to decide whether he stays on or a possible successor is found. Wieczorek-Zeul said she would support a Wolfensohn candidacy. She praised his commitment to fighting AIDS, corruption and poverty, as well as to relieving debt.
To confer more weight to poor countries in the World Bank, Germany is suggesting an increase in basic voting rights. This would boost the developing countries’ share to around 43 percent. Berlin further wants double majorities to be applied in future. Board decisions would then need a majority vote from both the rich and the poor countries. However, a high-ranking bank-insider did not think this approach would be acceptable. The process would too closely resemble cumbersome decision-making in the European Union. (dem)
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