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Ukraine: Delegation Views World Bank-IMF Meetings With Optimism

  • Andrew Tully

The World Bank and the International Monetary Fund (IMF) open their spring meetings today in an atmosphere of reform at the two institutions. The meetings this year mean little to Russia, according to its representative to the IMF. But Ukraine's delegation to the gathering arrives at a time of relative optimism for that country.

Washington, 24 April 2001 (RFE/RL) -- Ukraine's representative at the IMF is optimistic about his country's economic outlook as delegates gather in Washington for the spring meetings of the World Bank and the International Monetary Fund (IMF).

Russia's representative, on the other hand, says he expects little of interest for his country at the meetings.

Delegations from around the world are gathering at the headquarters of the World Bank and the IMF to assess the progress of the various programs of the two financial institutions. They will pay particular attention to reform of their operations.

Yuriy Yakusha, the executive director for Ukraine at the IMF, says his country's delegation to the meetings will be mostly interested in the institution's move to streamline the process by which it imposes conditions on its loans and credits. Kyiv has frequently objected to IMF conditions. And Yakusha told RFE/RL that even when his government and the IMF have agreed to certain conditions, Ukraine's parliament has delayed ratifying them.

But Yakusha says he is "more or less" optimistic about Ukraine's standing with the IMF. He says his country's economy has been growing robustly since the beginning of 2000, and he pointed to growth of more than 7 percent in the first three months of this year. As a result, he says, he believes that Ukraine is in general accomplishing more in economic reform than the IMF demands.

"Basically, they [Ukrainians] are overperforming all the time. They're meeting all those program targets and performance criteria with substantial margins for the first time.

Russia, however, is not expecting much from the spring meetings, according to Andrei Lushin, the alternate executive director for Russia at the IMF. He notes that his country has no program with the IMF now.

"We do not have any fund arrangement right now, and presumably there will be no discussions, at this stage at least, about any arrangements for next year."

In March, Russia ended negotiations with the fund for a one-year loan agreement, saying the financial benefits of the credit were outweighed by the strict conditions for the transaction.

Lushin said Russia will remain an IMF member but will, for now, confine itself to repaying previous loans to the fund. Moscow owes more than any other IMF debtor, about $11 billion.

The spring meetings are devoted to assessing the progress of the IMF and World Bank loan programs and development projects. The World Bank and the IMF also hold meetings every fall to make and coordinate policy.

This year's spring meetings come at a time when the World Bank and the IMF are facing continued pressure to reform.

For the past few years, political and financial leaders around the world -- and particularly in the U.S. -- have accused the two institutions of giving financial aid to governments that are either corrupt or do not have the economic structure to spend the money properly. And they say the IMF has failed to anticipate financial crises, meaning it must focus on rescue rather than prevention.

Most of the criticism points to the IMF. Last year, when he became managing director of the IMF, Horst Kohler promised reforms that would satisfy many of the Fund's critics. He pledged to streamline how the IMF imposes conditions for its aid. And he says the IMF will work more closely with private financial institutions to anticipate and resolve financial crises.

There are also critics of the two institutions who say they make too many demands on their clients and that development programs financed by the World Bank focus on economic growth at the expense of the environment. These were the chief complaints of street demonstrators who disrupted the meetings of the IMF and the World Bank last April in Washington and last September in Prague.

Gerald O'Driscoll -- an economist with the Heritage Foundation, an independent Washington policy institution -- says the IMF and the World Bank have no one to blame but themselves for the criticism. He told RFE/RL that they simply have not done the jobs for which they were created a half-century ago.

O'Driscoll says the World Bank has had more than 50 years to achieve its central goal -- eliminating poverty -- and he calls its record "appalling." He notes that throughout this period, the Bank has lent billions of dollars to what he called corrupt governments that have no interest in the economic welfare of their people.

Ian Vasquez agrees. Vasquez, an economist with the Cato Institute, a Washington think-tank, says the Bank's effort to help poor countries actually hurts them. He told RFE/RL that the Bank is far more guilty than the IMF of not making its loans conditional on economic reform. As a result, Vasquez says, it only makes poor countries poorer.

"It's guilty because of its own record of providing aid to countries that don't have the proper [economic] policies in place, so that the result is debt instead of development."

And O'Driscoll says that in recent years, the IMF has failed to predict financial crises. Now, he says, these crises are more frequent and more severe. He cites Turkey, which is consulting with the IMF over its current financial crisis. He says the government in Ankara is now in the midst of its 18th aid program with the Fund.

"Now obviously, whatever they've done in the previous 17 [IMF programs] hasn't been effective. And we're now -- the U.S. is now confronted with a major ally having a financial crisis and a political crisis. And the IMF is implicated. It thinks that's a good enough reason to criticize them."

But Michael Moore -- an associate professor of economics at George Washington University in Washington -- says it is unlikely that anything the World Bank and the IMF do to reform their practices will satisfy any of their critics.

According to Moore, those who promote aggressive intervention say these two financial organizations are not doing enough to reduce poverty in developing nations. On the other hand, he says, those who are suspicious of intervention believe the Bank and the Fund intervene too much.

"So some people would say they're [the IMF and the World Bank are] too socialist, and other people would say they're not socialist enough. [Laughs] So it's hard to draw a general theme from that, but I think it's very much colored by the political viewpoint of the critics."

Moore says there is no question that the IMF and the World Bank are not perfect, but he wonders whether they deserve what seems to be a barrage of criticism. The two organizations cannot avoid publicity, he says, and therefore they cannot avoid bad publicity when things go wrong. Moore says this is particularly true of the Fund.

"The media's focused on a country [that is in economic trouble], and then the IMF steps in. Often the analogy is that they're like the fire truck. So they show up and some people will say, 'Look, every time the IMF shows up, there's a fire going on.'"

Reform will not be the only item on the agenda for this year's spring meetings. Today, the IMF releases its annual report, the World Economic Outlook, which issues projections for economic growth worldwide through next year. And on Sunday, the World Bank will issue its annual report, World Development Indicators 2001, which forecasts progress in reducing poverty.

Most member nations of the Bank and the Fund also will be sending their finance ministers to the meetings. This provides an opportunity for an informal meeting of the finance ministers of the Group of Seven leading industrialized nations -- Britain, Canada, France, Germany, Italy, Japan, and the U.S. The meeting will take place Saturday at the U.S. Treasury (Finance Ministry).

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