21.06.2024

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WORLD BANK AND IMF FORCING ITS HAND

For Immediate Release, 06/06/00


In recent communications with the World Bank and the Slovak government, CEE Bankwatch member group Friends of the Earth Slovakia has confirmed that the finalization of the Bank’s Country Assistance Strategy (CAS) for Slovakia, which outlines the Bank’s plan for future assistance, has been postponed due to disagreements about the role that the International Monetary Fund (IMF) should play in Slovakia. The postponement of the CAS, originally scheduled to be finalized in April, stems from the World Bank preconditioning the implementation of the CAS on the Government accepting an IMF designed and monitored adjustment program, a move which some within the Slovak government believe would hurt the country’s standing on the international capital markets. Civil society organizations, such as Friends of the Earth Slovakia, believe that this situation only highlights some of the criticisms, recently publicized during the protests in Washington, against the two international institutions. ”The World Bank and the IMF say that they work as partners with client governments, but this situation illustrates how the two institutions work as a team to push their own agenda, regardless of whether or not the government and the public wants it,” commented Juraj Zamkovsky from Friends of the Earth Slovakia. Such criticism takes added significance given recent comments made by the IMF’s new managing director, Horst Koehler, who stated last week that the IMF must ”listen to the people” rather than ”lecture” countries and ”impose” its will. Mr. Koehler’s comments stem from the mounting criticism of the IMF and World Bank in recent years. Critics claim that the economic adjustment measures which the IMF requires its client countries to implement, such as government spending cuts, deregulation or re-orientating the economy towards exports, lead to an increased and disproportionate burden on the poor, women, domestic businesses and the environment. The World Bank works in tandem with the IMF by conditioning its involvement on the acceptance of a formalized relationship with the IMF, then financing the implementation of the IMF adjustment measures. Joseph Stiglitz, former chief economist at the World Bank and former economic adviser to U.S. President Clinton, is also highly critical of the two institutions. ”In practice, (the IMF) undermines the democratic process by imposing policies. Officially, of course, the IMF doesn’t ´impose´ anything. It ´negotiates´ the conditions for receiving aid. But all the power in the negotiations is on one side -the IMF’s- and the fund rarely allows sufficient time for broad consensus-building or even widespread consultations with either parliaments or civil society,” Stiglitz recently wrote in an article published in The New Republic (April 17-24, 2000). A representative from the Slovak government, who is in regular communication with the World Bank, confirmed that the Slovak government has decided to establish a formalized relationship with the IMF. The arrangement is likely to entail the implementation of an adjustment program which would be monitored by IMF staff. ”The decision of the Government to enter into a formal relationship with the IMF is likely the result of the pressure of the potential withdrawal of World Bank support, as well as the fear of spooking international investors and creditors, which may occur after rejecting the IMF, rather than the actual full desire of the government and the public for such a formal relationship,” Zamkovsky concluded.

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