IMF–NGOs Dialogue: A Search for Development Partners
An Article by
Sérgio Pereira Leite
Assistant Director, Office in Europe
International Monetary Fund

September 2001

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I opened the Wall Street Journal a few days ago and, just above the main headline of the day, I found out that "Accountability is the new buzz word." This was actually an article about advertising and its main point was that ad agencies would have to become more accountable to their clients (and business to consumers) if they were to be successful in today's world.

It seems to me that when one takes the greatest challenge of the 21^st century—poverty eradication—the point is equally relevant. Accountability and participation are crucial elements to the success of any poverty reduction strategy.

So today I would like to tell you how the International Monetary Fund is dealing with accountability and participation in its poverty reduction initiative and how this creates new opportunities for civil society—and for non-governmental organizations (NGOs) in particular.

The IMF is a cooperative institution of member countries

It is important to start by stating that the IMF, as a cooperative institution of 183 member countries, is first accountable to its Executive Board, which is composed of 24 directors representing the member states. The decisions of the Executive Board are almost invariably made by consensus. Country and policy reports are now more often than not published, together with country commitments (letters of intent) and poverty reduction strategy papers. Public information notices alert the media to the views and decisions of the Executive Board. Data on IMF financial transactions and liquidity position are now regularly released to the public. A web-site, www.imf.org, makes all this information easily available to those who have internet access.

The IMF is constantly reviewing its work—and relevant experience coming from all quarters of the world—to define best practices and guide its future advice to member countries. For example, internal and external evaluations of the Enhanced Structural Adjustment Facility (ESAF) were recently carried out. The associated reports were published, together with public comments on their conclusions. The ESAF was replaced by the Poverty Reduction and Growth Facility (PRSF) partly in response to this work. Other recent external evaluations of IMF operations include the External Evaluation of IMF Surveillance, in September 1999, and the External Evaluation of IMF Research Activities, in March 2000. In April 2000, the IMF Executive Board agreed to establish an independent evaluation office, which should become operational before the Spring of 2001.

The IMF needs partners willing to work as a team to eliminate poverty

The IMF cannot win a war on poverty alone. Its expertise in macroeconomics and financial sector issues is just one element, although an important one, in the arsenal that the world has at its disposal to fight poverty. Other development partners, including the World Bank, play an equally important role in ongoing poverty elimination efforts. However, to be successful, poverty reduction strategies require a level of commitment that can only be developed by internal debate. In other words, successful poverty reduction programs require "ownership," which in turn requires democratic consultation and full participation by stakeholders in developing the strategy. A question that is often asked is what should we do if the national government, which should be in the driver's seat, pays only lip service to the participatory process. My answer is that we should push the government gently in the right direction; but, in the end, it is civil society that will have to demand more participation in the development process.

The role of civil society

The new participatory approach adopted by the IMF in its poverty eradication efforts incorporates an important role for civil society and the IMF recognizes the contribution that NGOs are making to poverty reduction. What the IMF is trying to achieve now is not to reinvent the NGO's role in the poverty reduction process, but simply to make it clear that we are ready to join forces so as to move decisively towards our shared objectives. NGOs have been influencing poverty reduction approaches in at least five ways:

• Advocacy. It is undeniable that NGOs have made a major impact in bringing poverty and debt issues to the forefront of the political agenda. Many NGOs have focused their analyses on debt relief, the perceived failings in structural adjustment programs, particularly effects on the poor, and, more generally, issues of governance, transparency and accountability. It is no secret that we have not always agreed on how to tackle economic development and poverty reduction. But it is also true—although less recognized—that our differences are narrowing. The IMF staff is committed to keeping an open mind and we hope our interlocutors will do the same. Building constructive partnerships among all development partners, while moving away from confrontation, seems to be in the interest of all parties, not least the poor, who can only gain from a better-coordinated and more focused war on poverty.
  
  
• Design. NGOs can also contribute by developing poverty reduction proposals that are effective and yet realistic in their demand for resources. In poor countries, poverty reduction strategies almost always involve trade-offs. Increasing efficiency through structural reforms is perhaps the only way to achieve more of everything. However, experience has taught us two things: (a) macroeconomic stability is pro-poor and (b) it takes time to eliminate structural bottlenecks. Therefore, finding adequate short-term trade-offs, which do not cause severe macroeconomic imbalances, will remain a key design feature, one in which civil society has a central role to play.
  
  
• Identification. Another equally useful contribution is the identification of development bottlenecks, as well as possible causes and regional distribution of poverty. Significant resources and knowledge are necessary to put together meaningful poverty statistics and to derive useful conclusions from them. Because these studies can be quite expensive and time consuming, it is often too tempting to approach the subject superficially and to shape conclusions in line with preconceived ideas. Together we will need to look into the issues dispassionately, and with acute awareness that our mistakes could cost dearly to those who can least afford it.
  
  
• Project implementation. NGOs carry out projects in low-income countries, which are financed both by their own resources and by multilateral and industrial countries' contributions to NGOs. The financial resources involved in these efforts are not insignificant, having reached some US$10 billion in 1998. The expertise, enthusiasm, and financial resources that NGOs bring to bear on development and relief problems are a powerful contributor to the world's efforts to eliminate poverty. But like other activities in support of poor countries, they are not without their share of false starts and failed projects, which just reflect the complexity of the challenge. In the development area, only spectators can claim not to have made mistakes; those of us who have been in the trenches have had to keep our minds open to new suggestions and approaches, as progress in poverty reduction has indeed been far too slow for comfort.
  
  
• Monitoring and evaluation. Poverty reduction strategies attempt to set well-defined intermediate targets that can be monitored to allow stakeholders to evaluate progress, design improvements, and, more generally, undertake remedial actions to keep the program on course. NGOs can play an important role in this area not only in monitoring progress against these targets, but also by informing the choice of intermediate targets relevant to the specific conditions of the country, as well as by compiling the data required to judge progress. Finally, efforts to foster good governance, including greater accountability and transparency in budget design and execution, are also critical aspects of the monitoring and evaluation role of civil society.

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At the start of the 21^st century, poverty remains a huge global problem. Today, twenty percent of the world's population lives on less than one dollar a day. This is a time bomb that, if not quickly defused, could cause much damage to rich and poor countries alike. The IMF, national governments, development partners, and civil society share the overall objective of halving poverty levels by 2015. We may have different roles and approaches but we need to keep in mind our ultimate objective. The IMF calls on all development partners, and civil society in particular, to work together—with an open mind—to achieve this common dream.