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World: IMF And World Bank To Focus On Good Governance

  • Robert Lyle



Washington, 1 October 1996 (RFE/RL) -- The focus of this year's annual meetings of the International Monetary Fund (IMF) and the World Bank, formally opening later today in Washington, is expected to be on strengthening an already robust global economy and building into the system what IMF Managing Director Michel Camdessus calls "good governance."

The finance ministers, central bank governors and other economic leaders in both the public and private sectors from the 181 member nations of the fund and the bank meet annually to review the state of the world economy and the operations of the two premier international financial institutions. As importantly, it is a chance to meet with each other to discuss what is going on in each country and region of the world.

Leadership committees of the fund and bank, in addition to groupings of nations such as the G-7 industrial nations and the G-24 poorer, non-aligned countries, have been meeting over the past week, laying the groundwork for the plenary sessions which run through Thursday.

The policy-making interim committee of the IMF, composed of 24 top officials of member governments, including Russian First Deputy Prime Minister Vladimir Potanin, on Saturday adopted a "Declaration on Partnership for Sustainable Global Growth." Camdessus called it the "eleven new commandments for the good governance of the world economy."

The intent was simple: set down a series of basic principles that every country must follow if it hopes to be a full participant in the global economy and if the general system is to avoid serious crises.

The fund, in conjunction with many of the richer nations, has already been taking steps to spot troubles earlier and acquire the tools necessary to deal with problems before they become crises.

This includes the enhanced surveillance the IMF has already put into place for every member nation, rich or poor, small or large. It is demanding greater transparency of national economic data. A move is developing, pushed by some G-7 nations, to release at least the summaries of reports the fund prepares on each nation's economy.

Previously, the larger nations opposed the idea. But on Monday both U.S. Treasury Secretary Robert Rubin and British Chancellor of the Exchequer Kenneth Clarke said they would begin releasing the IMF summaries on their countries. They urged the fund to have all the reviews published.

World Bank President James Wolfensohn, who has been reorganizing the bank to be far more efficient and responsive to the needs of developing nations, intends to pick up on the theme of a global set of standards. Officials say he will speak to the meetings today about the need to tackle bribery and corruption in financial dealings.

Wolfsohn is known to believe that corruption has been a long-ignored problem that undercuts the effectiveness of the bank and wastes millions upon millions of dollars every year.

The bank has already taken steps to tighten its own standards, recently instituting rules which allow it to cancel part of a loan if it determines that corruption or fraudulent practices were involved in procurement contracts. It can also now blacklist any company which is known to have been involved in corruption.

Another area Wolfensohn is expected to mention is the problem of money laundering. No one has put an accurate figure on just how much money is involved in the process of hiding illegal earnings by processing them through legitimate banks and enterprises, but experts believe it amounts to thousands of millions of dollars yearly.

The annual meetings will also cover a new fund and bank initiative to provide relief to up to 41 poor nations, mostly African, which are so loaded with debt they have no hope of getting out of debt.
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