IMF And The World Bank—Friend Or Foe?

By Anthony Stoppard, IPS, 18 September 2000

JOHANNESBURG Sep 18 (IPS)—South African Finance Minister, Trevor Manuel will, this week, attend the International Monetary Fund (IMF) and World Bank annual meetings, to be held in Prague from Sep 19-28.

Manuel is chair of the IMF and World Bank Board of Governors this year, and South Africa chairs the group of English-speaking African countries known as Constituency One.

Our constituency is the poorest group of countries. One of our quests when we get to Prague will be to carry on the push for reform and for the IMF board to be made more representative of Africa.

At the moment, the Group of Seven (G7) countries have a share holding and vote of just less than half, while 43 African countries have less than five percent voice in the institution.

We also believe the IMF should not try to micro-manage developing economies as, in many instances, this undermined democracy, said Manuel, at the press briefing in Cape Town on Friday.

However, there is a great deal of skepticism about how much reform Manuel will get right during this round of meetings—or even over the long term.

Unfortunately, Manuel’s attempt to democratise the Bretton Woods Institutions by ending United States (US) veto power is going nowhere. That idea has already drawn ridicule from Bank president James Wolfensohn, says an associate Professor at Johannesburg’s University of the Witwatersrand, Patrick Bond.

Bond, who is also affiliated to the Alternative Information and Development Centre (AIDC), refers to a South African Broadcasting Corporation documentary—filmed during the world financial institution’s meetings in April in Washington—to underline his point.

In the documentary, at a lunch, Wolfensohn responds to questions about how to end the United States’ effective veto on the institutions by saying: This is a problem I’ll have to leave to my successor. If I did raise it, I’m sure I would get a quick successor.

US control over the IMF and World Bank gets worse, not better, Bond goes on. Hostility from Lawrence Summers, the US treasury secretary, has led to furious resignations by Bank reformers Joseph Stiglitz and Ravi Kanbur and the rejection of Germany’s first choice as IMF managing director.

The reformers have lost all the key battles. And that’s giving lots of momentum to the abolitionists in social movements who are working out a strategy to defund the World Bank, says Bond.

Manuel has made it clear that South Africa will not support the call for the World Bank and the IMF to be closed down.

We will not support the call of some demonstrators, particularly those in the first world, because we believe that very poor countries have no other way of accessing capital markets, said Manuel.

In any event, South Africa is looking at borrowing 200 million US dollars from the World Bank to rebuild hospitals where the buildings have fallen into disrepair.

However, Manuel downplayed the significance of the possible borrowings, saying that if the terms were not notably better than what South Africa could secure on the international capital markets, he would join planned protests against World Bank loans.

Jubilee 2000 South Africa—an organisation that is campaigning for the cancellation of the international debt of poor countries - is planning a week of protest actions in South Africa against the World Bank and the IMF—and the possible loan.

We want to educate people about the IMF and World Bank and highlight the impact that their policies have on people’s lives, says Jubilee 2000 spokesperson, George Dor.

The South African protests will culminate in a march in Johannesburg on Sep 26 that will coincide with similar protests in Prague.

We don’t want the loan because we don’t want the World Bank to get its talons into our economy. The alternative is to pay for the maintenance out of our budget. We need to make the correct decisions in our budget to meet the needs of people rather than putting money into weapons and tax cuts, said Dor.