Source:
Latindadd
Patricia Miranda
Mon Oct 29 2007
At the World Band and IMF meetings, expectations from Latindadd and its members were mainly focused on additionality of aid, debt sustainability framework and future lending after HIPC and MDRI. It is worthy to remark that few events were specifically related to Latinamerican issues. CSOs also take this opportunity to meet among networks and NGOs from different regions and countries, which is very valuable to share experiences, updated information, future activities and further coordination.
Latinamerica has been going through important economic, social and political changes in the last years. Its current economic growth would make it have more middle income countries than low incomes. Despite this, inequality remains, and poor people is not being benefited by growth.
As part of the main changes, it is also the participation of social movements’ leaders that have reached the government levels in the recent years, carrying out policies to reverse past structural reforms as privatisations and trying to generate more equity and citizenship participation on public policies.
Under this overview, Latinamerica’s role could be the start of the first changes in the current financial architecture, but still with very strong needs to reduce poverty, inequality and to achieve a sustainable and productive development.
At the World Band and IMF meetings, from October 18th to 22nd, expectations from Latindadd and its members were mainly focused on additionality of aid, debt sustainability framework and future lending after HIPC and MDRI. It is worthy to remark that few events were specifically related to Latinamerican issues.
Among the main topics addressed, IDA replenishment would have an apparent increase of aid despite debt reliefes; statements said that countries which were benefited by MDRI should not be financing their own relief. In a way, this already happened with some creditors and thus poor Latinamerican countries are anyway contributing to make this cancellation real.
The increase that the WB and IMF foresee for IDA will be certainly important, but the criteria that will be used to get these resources is questionable. The Performance Based Allocation methodology and the Debt Sustainability Framework, focused on financial indicators and subjective parameters, will constitute tools that will reduce aid towards these countries and, furthermore, to make loans less concessional.
Since these methodologies are mainly based on financial calculations instead of being focused on achieveing MDGs and other development and social goals, the availability of non concessional loans could risk debt sustainability levels again.
It is important to stress that despite some countries have an increase of their incomes and have prepaid their debts or being benefited by debt reliefes, they still have new financing needs to reduce poverty and inequity, thus eventually they will search for new loans.
Another reason to state that methodologies of IFIs don’t take an integral approach of debt sustainability, is that they just don’t include the domestic debt within their indicators, which shows a false “debt sustainability” assumption after MDRI.
In several cases, domestic debt is a result of conditionalities, so whether loans are supposed to have less of these conditions now, some countries are still paying the cost of its implementation and impacts.
WB and IMF sustained at the meetings that there is complete compatibility among several methodologies to determine IDA allocation, but it would be very important to promote ownership of countries to encourage them to make their own analysis and strategies, defining their own sustainability levels, since they know better their needs and realities.
At these meetings there are several spaces for civil society participation, but IFIs should promote this more especially in lending processes and projects implementation, with more transparency and information dissemination, in order to have additional complementary issues for governments’ plans and policy making.
Besides the IDA replenishment possibilities, based on the willingness of rich countries contributions and the not clear possibility of having private IFC funds, IFIs should take into account new initiatives that are going to be available soon and which were addressed by civil society meetings, as Bank of South, which could be an interesting alternative for traditional lenders in LA egion. Weather debt sustainability and concessionality has not been decided yet in Bank of South, the equity in participation -1 country: 1 vote- is a remarkable change.
After debt reliefes initiatives, where is possible that illegitimate debt would have been legitimized, it is important to look ahead and implement criteria and regulations in order to promote a responsible lending, where creditors and debtors are committed from their action fields and roles. This seems not to be an issue of discussion for IFIs yet.
Among other important issues approached it is the active role that IFIs should have with climate changes and impacts with the projects where they have investments.
Finally, it is worthy to mention that civil society also take these opportunities to meet among networks and NGOs from different regions and countries, which is very valuable to share experiences, learned lessons, updated information and future activities and further coordination.
In this opportunity, it was important the coordination agreed regarding the odious debts papers prepared by the WB and UNCTAD, as well as other activities as responsible lending and debt audits. Among them, specially the Ecuador activities have been of interest as well as the initiatives to make round tables with IFIs in order to share CSO acknowledgement.
Responsible lending should reach more parameters, as the use of resources and financing, which is a task from the governements of debtor countries but should be also a concern for creditors, in order not to finance initiatives that negatively affect climate, environment or life conditions of people where projects are implemented.
Latinamerica need more fair financial and commercial relationships with multilaterals, in order to support their own development goals and a true IFIs commitment of aid without conditionalities.
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