Global Policy Forum

Jonathan Finer

It was the eighth time that Saifur Rahman had come here with his mission more or less the same -- convincing the higher-ups at the World Bank and International Monetary Fund that aid to his poverty-stricken country was not money down the drain. As the finance minister of Bangladesh, a country rife with corruption as well as one of the world's poorest, he was used to having a hard sell. This weekend was no different.

The country's previous government, which fell last year, had done little to meet the aggressive financial targets demanded by the IMF and World Bank before they would send more money. The IMF cut off funding in 2000. World Bank aid is now about half the $600 million annual funding it had sent in 1999.

Rahman started a long weekend at 9 a.m. Saturday, armed with statistics that document the Bangladesh government's recent progress in cutting its budget deficit and building its hard-currency reserves. In a meeting with IMF officials, Rahman knew he had to convince the money men that the government's reforms had put Bangladesh on the right track.

But Rahman also knows that when protesters, such as those who flocked to Washington this past weekend, rail against the evils wrought by globalization on the developing world, they are talking about countries like Bangladesh. These countries come to global finance meetings in a weak position, facing stern institutions that dictate policies that the protesters say too often harm poor people and the environment.

Rahman knows something else: He is in no position to complain. "The IMF and the World Bank have policies that are clearly not in our interest," Rahman said. "But I feel it is better to try to use the system to our advantage from within, and hopefully help change parts of it, than to fight it from outside. To do that you have to show them you are making progress."

Progress is not how Mausumi Mahapatro would describe the Bangladesh government's new policies. Mahapatro, 27, traveled from Dhaka last week, but she was here to attend protest rallies and to meet with bank and fund officials to lobby them to move more slowly on some of the reforms that she believes are too harsh. "In its efforts to do what the IMF and World Bank want, the government is choosing policies that are harming the poor," said Mahapatro, an associate coordinator of policy at the Bangladesh office of ActionAid, a British-based nonprofit group that fights poverty.

A few months ago, for example, the Bangladesh government began closing unprofitable state-owned businesses, one of the many reforms pushed by bank and fund officials. The government shuttered a mill it owned in Adamjee that produces a fiber from jute used in clothing and textiles. More than 25,000 people lost their jobs.

"They make decisions like that but do not consult enough with the grass-roots organizations in Bangladesh," Mahapatro said. "Everything is compromised for the sake of attracting more foreign aid."

Frederick Temple, the World Bank's country director for Bangladesh, said that while the bank had not required the government to close the mill, the decision to do so was sound policy. "They paid compensation to the workers who lost their jobs" Temple said. "The mill was losing more than $20 million a year."

As he shuttled from meeting to meeting in a private car, Rahman, who looks considerably younger than his 71 years, watched the protesters from behind police barricades. "They very definitely express the feelings of many people in the developing world, but we policymakers cannot always be so candid," he said. "They are right in saying that the bank should not impose blanket policies, but should tailor them to each country's needs. Their voices are heard, even in far away countries."

Bangladesh, wedged between India and Southeast Asia, has long been on the front lines of the bank's and fund's development mission. But as frustration with the lending institutions grew in the late 1990s, Bangladesh's government turned away from the reform agenda it had followed earlier in the decade. In response, the money flowing to Bangladesh started drying up.

The reason: bank and fund money comes with implicit strings attached, and Bangladesh was not making the grade. Borrowers are urged to implement "structural adjustments," which are market-friendly policies such as economic liberalization and privatization of major industries that anti-globalization activists say can cause a country's poor too much pain for too little gain.

The new government is now "heading in the right direction" in its first year under Prime Minister Khaleda Zia, the World Bank's Temple said. "We told them when they came in that if they make progress, they can expect enhanced financial support," he said.

Over that past year, the government has embarked on a comprehensive reform agenda and is negotiating with the IMF to restart its loan support. The talks broke down in February, but Rahman said a loan of up to $500 million could be approved by early next year, pointing to decisions that have resulted in a reduction of the country's budget deficit to 4.3 percent from about 6 percent and in a doubling of its foreign exchange holdings to $2 billion.

"We met the IMF's balance-of-payment targets, their deficit-financing targets and their budgetary targets. We've shown we are in good shape," Rahman said. "The loan should come through soon." After his presentation to IMF officials Saturday, Rahman met with Britain's secretary of state for international development, Clare Short, for bilateral talks on development aid.

Then that afternoon at Bangladesh's expansive, modern embassy on International Drive, the finance secretary made his pitch to an informal colloquium of expatriate Bangladesh businessmen and economists who live in Washington and have high expectations for the country where they were born. Many in the group still do business in Bangladesh and listened intently for evidence of reform.

After a 45-minute speech highlighting the progress the government has made, Rahman took questions from the group. Some good-naturedly challenged the finance minister's claims of progress and pushed him for more specific examples. Many tough issues were raised: human and civil rights abuses, political violence and corruption -- Bangladesh has been ranked the most corrupt government in the world by Transition International. Rahman defended the government's record on each count.

"It was a good opportunity for him to give and receive advice," said Al Barkat, the president of a Gaithersburg software company with a programming facility in Dhaka, Bangladesh's capital. "We've been impressed by what the government has been doing lately. On balance, things have gotten more predictable, and more stable, which is good for business."

After a hectic day of meetings, Rahman relaxed on the sofa of his spacious hotel suite in downtown Washington. He knew that just a few blocks away, protesters had been gathering in Pershing Park, and he smiled at the thought of thousands of people taking to the streets to demonstrate on behalf of countries half a world away. Then he looked out the window toward the World Bank and IMF headquarters.

"Of course, overall, they have been good for the developing world," he said of the two institutions. "Their assessment of events and ours sometimes do not match. We apply to them and we have to obey the rules. We wish they would better tailor their policies to each country's needs. One size does not fit all."

On Sunday afternoon, Rahman addressed delegates from the other 184 World Bank and IMF member states for the first and only time. He called his speech "a chance to present Bangladesh's views on development," and during the five-minute address, he stuck to his reform-minded message: "The present government," he said, "has within the shortest possible time . . . undertaken the painful process of restarting the reforms."

But he also gave a warning about the consequences of bank and fund policies that push developing countries to go too far, too fast. "Further reforms are unlikely to be acceptable," he said, unless greater resources for a social safety net can be mobilized.

While he clearly relished the opportunity the annual bank and fund meetings offer to present his government's successes to the international community, Rahman said his long-term goal for Bangladesh is to make sure that someday such trips are no longer necessary. "The reason we carry out a reform agenda is so in the future we will not have to go through the humiliating exercise of always asking for international help," he said. "Our ultimate goal should be to stand on our own feet."

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