Sunday, April 13, 2008

IMF and World Bank meet amid financial crisis and food price hikes

The media attention on the Spring Meetings of the IMF and World Bank in Washington DC this weekend has mostly been on the current financial crisis. The IMF has been under increasing pressure to find a role for itself in the midst of a changing world over the past few years, and perhaps hope to find it in these turbulent times. But critics point out that the IMF did not do a good job warning the world of this crisis, or even predicting it. So how can this institution really play the global governance role for which is was created?

Meanwhile for poor countries the main issue is the soaring food prices, which has led to riots in many parts of the world in recent months. World Bank President Zoellick warns that the problem is so serious it may undo seven years of poverty reduction efforts. It is vital that the finance and development ministers gathered in Washington this weekend work to resolve this crisis, which is hitting the poorest hardest of all.

And the other big issue on the agenda is, of course, climate change. Zoellick is hosting a 'Bali Breakfast' this morning to discuss the Bank's role, ahead of today's Development Committee meeting. But campaigners are seriosuly worried about the part the Bank can and should play. Yesterday we met with European Executive Directors of the Bank to raise some of these concerns. At the same meeting we discussed illegitimate debt and responsible lending - and there are clear parallels between the two issues. Finance for climate change needs to be seen as compensation for the 'debt' the rich world owes the poor - not lending, on possibly expensive terms, under a development umbrella. And civil society groups are also worried that funds being discussed at the Bank for tackling climate change will be outside of the international negotiationsat the UN and therefore undermine what is at least a much more egalitarian process. Urgent action is clearly needed - but it must be the right action for the world's poor.

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