January 2003
NGOs circulated this statement discussing the structural inadequacies of the IMF/World Bank and ideas for reform. The final statement complete with signatories will be available on April 10, 2003 at www.brettonwoodsproject.org/topic/reform
Following the Monterrey conference on Financing for Development a number of official discussions are underway about changing the governance regime of international institutions. Civil society organisations and others have long pointed out that the World Bank and IMF wield enormous power over developing country governments, yet have severe shortcomings in their legitimacy and effectiveness. The undersigned organisations and individuals hereby put on record a statement of some of the key problems with World Bank and IMF governance and their 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. Rich country Executive Directors currently control over 60 per cent of the votes at the World Bank and IMF. The US government has a veto on decisions requiring a super-majority. The dominance of the richer countries remains the case despite the increasing levels of income to the Bank and Fund from borrowing country loan repayments.
We demand that:
a. 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;
b. There be no more than 10 countries per constituency, and rotation of Board members among different countries in the constituency;
c. No one country should have a veto on any decisions.
2) MAKING GOVERNING BODIES TRANSPARENT
The World Bank and IMF have made 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 decisions which affect the welfare of people across the world, citizens have a right to know what positions their representatives are taking within their governing structures.
We demand that:
a. The agenda, transcripts, summaries 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 principle should be narrowly drawn and based on a clear indication of harm that would result from disclosure of specific information.
b. Board members should express their position with formal votes rather than informal indications of position.
3) OPENING LEADERSHIP SELECTION
The leaders of the World Bank and IMF play an important role in defining the directions of their institutions, chairing their boards and representing them publicly. They are currently selected in a non-transparent process which limits applications on the grounds of nationality. The European countries nominate the IMF Managing Director while the USA nominates the World Bank President and the IMF Deputy Director. This is unacceptable. The minor steps agreed recently to improve the selection processes have not gone nearly far enough.
We demand:
a. 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.
4) REVERSING MISSION CREEP
The World Bank and the IMF have taken on so many roles that they have branched out to cover areas and issues way beyond their mandate and competence. By encroaching on the mandates of other multilateral institutions. By doing so they have increasingly deprived UN specialized agencies and bodies with expertise in particular fields of the freedom to propose effective policies. Indirectly this has also undermined the participation of developing countries in global policy-making and agenda-setting.
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