USA: Congressional Panel Says IMF, World Bank Fail to Help Poor

WASHINGTON, DC -- A coalition of development and environmental advocates today said a new report by a Congressionally appointed commission is a welcome acknowledgement that the International Monetary Fund (IMF) and World Bank Group are largely failing in their mission to address world poverty and economic stability, and need major overhaul. However, the groups say that while the report contains some laudable recommendations, it fails to address other key fundamental problems.

According to the report, written by a panel of economists headed by Allan
Meltzer, the failures of the World Bank Group and IMF can be traced to
"overlapping missions, ineffectiveness, corruption, and waste of
resources, and failure to develop successful regional programs in
agriculture, forestry, environment and health care," among
other problems. But while the Commission also said "lack of transparency
and accountability" contributed to this failure, it did not offer any
reforms to address this problem.

"The Meltzer Commission report gives further weight to the growing
evidence that these institutions have caused serious social and
environmental damage to those nations they should be assisting, "said
Carol Welch, International Policy Analyst for Friends of the Earth.
"However, until the IMF's chronic lack of accountability and democracy are
also dealt with, any reforms are unlikely to have a lasting positive
impact."

For example:

The IMF's lack of accountability and democracy, combined with US dominance
of the institution, has made the IMF an agent of Wall Street, rather than
an enabler of global stability and prosperity. The groups say an
independent evaluation unit and an ombudsperson are essential requirements
for an overhauled IMF, as is true participation of IMF borrowers in the
institution's governance.

While the Commission rightly identifies structural adjustment lending as a
function of the World Bank Group and not the IMF, it fails to call for
more oversight and attention to the environmental and social implications
of this function. Currently the Bank does not conduct environmental or
social assessments for these programs, despite more than a decade of
research that clearly demonstrates their negative impacts to poor
countries.

The Commission finds correctly that the World Bank Group should restrict
its financial support to sectors that have a direct and demonstrable
connection to poverty alleviation and sustainable development. However,
it overlooks a number of important sectors that can help fulfill this
mandate in environmentally and socially beneficial ways. These include
investment in renewable energy and efficiency programs, education,
improved urban living conditions, and combating pollution.

The groups supported the Commission's recommendations that the IMF's
structural adjustment lending program be eliminated, stressing that the
IMF is not equipped to provide poor countries with long-term development
finance and capacity building. They also endorsed the Commission's call
for immediate debt cancellation for the poorest countries. Finally, the
groups backed the Commission's call for elimination of the Multilateral
International Guarantee Agency (MIGA), the World Bank's private risk
insurance arm, saying the World Bank's development mandate should not be
confused with that of supporting the private sector or providing risk
insurance to companies.

Contact: Andrea Durbin or Carol Welch, Friends of the Earth:

202-783-7400 or via cell 202-744-8048

Jo Marie Griesgraber, Center of Concern: 202-635-2757, ext. 126

Joanne Carter, Results: 202-783-7100

Deborah Rephan, Environmental Media Services 202-463-1310, ext. 267

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