Dialogue and Incongruity: Meeting with the World Bank and IMF

By Derek MacCuish

It was snowing in Washington. I was there - a Canadian in the capitol of the United States - to talk with people in the IMF and World Bank about the condition of life in Africa. It was Christmas season, and the newspapers were speculating about the low level of seasonal shopping and loss of consumer confidence. At the IMF and World Bank, we were talking about efforts to survive in the most impoverished nations on earth. It was a time of incongruity.

For a long time now, the Social Justice Committee has tried to back up our protest against economic and social injustice with a search for solutions. As part of that search, we engage in dialogue with people that we identify as key to decision making. In Canada, on economic policy, this is the Minister of Finance and his advisors and analysts. On the international level, we have focussed on the World Bank and IMF as the two main organizations directing economic policy in impoverished countries. In recent years, the dialogue has been with the Canadian representatives on the Boards of Directors and their staff in each institution, and with the people responsible for the debt relief program.

This was changed somewhat in December, when I set up a series of meetings in Washington with some of the people responsible for designing the economic policy packages for some impoverished countries. The countries of interest were those that have been stalled in their debt relief programs because they haven=t complied with the conditions attached to that relief. They included Senegal, Guinea-Bissau, Guyana, Nicaragua and Honduras.

The situation in each of these countries is different, but in many ways the problems they face are similar. They all have a heavy debt burden, in a context of tremendous poverty and low quality of life for too many of their citizens. They all are eligible for debt relief, but are having trouble getting to what is called the Completion Point of the main relief program because the IMF and World Bank are not satisfied with their economic restructuring programs. In Senegal, this has to do with privatization of the peanut industry, and electricity. In Honduras and Nicaragua, it's government spending and privatization of public services. In Guyana, it=s privatization of sugar and the way government contracts are awarded.

Honduras, for example, is being told that it has to renege on a wage increase for teachers if it wants its economic program approved and the debt relief that will follow. From the institutions' point of view, these salaries are eating up 99% of the education budget, leaving nothing for other schooling needs. They are the result of powerful union action during an election year and a government that was ready to promise too much. The counter-argument is that Honduras is benefiting from the best education system in the region, yet its tax collection lets the rich off the hook entirely.

Guyana has very high levels of unemployment, and the exodus of people has climbed to 50,000 a year, out of a total population of less than 800,000. The sugar industry is a major employer, but the Bank and Fund argue that it is inefficient and a drain on the public purse, costing millions of dollars rather than contributing to a sound economic base and growth for the future. They say it needs to be modernized, reformed, and made efficient. Restructuring the sugar industry is a condition of debt relief, but it will probably cost 8,000 people their jobs.

In these countries as in all that were the focus of discussions, the conditions they have to meet to get debt relief (and other development assistance) are related to real economic problems. The differences of opinion lie more in how the problems are going to be addressed. What processes are in place to include the people affected in the decision making? What do the conditions now imposed have to do with debt relief? Why is severe indebtedness being used as a lever to force rapid economic restructuring that has been criticized as harmful to the poor?

The people I met at both institutions were mostly welcoming and generous with their time, and willing to share their knowledge and opinions. Discussions were often frank, but polite. The only difficulties were presented by the External relations Department of the IMF. Of three meetings to be set up by that department, one was refused and another cancelled. The agenda of the third meeting was changed without consulting me, and External Relations invited other participants but refused to tell me. The Director of External Relations responded to a letter of complaint by providing a list of restrictions on access to meetings and information at the IMF. We have been in touch with people at other organizations around the world who are quite concerned about this response, and we'll be following up in the coming weeks to push for safeguards to productive dialogue.

Also in the weeks ahead, we'll be preparing in-depth looks at a couple of countries, their problems getting debt relief and the economic conditions attached, and share these with you. We'll also be expanding our activities to respond and push for debt cancellation and greater empowerment of the people affected.