Responses: Nikunj Soni, Executive Director, the Pacific Institute of Public Policy (PiPP)

The ripples of the global economic downturn have been slower to reach the shores of the Pacific island countries and the resulting economic uncertainties less than in other developing countries. This is partly because of the relative lack of integration of these countries with the world economy and also because of the generally better performance of the larger regional neighbours such as Australia and ASEAN.

Nevertheless no part of the world is immune and it has been interesting to see how the IFI’s have reacted.

In general there has been no specific reaction (by the IFIs) in the Pacific. Little increased or flexible lending and certainly very little region specific analysis. Generic analysis abounds a plenty but much of this could have been cut and paste from analysis undertaken in Africa. This is a shame as the Pacific has unique vulnerabilities which the crisis has the capacity to exacerbate.

The response from the IMF has been to merely downgrade forecasts – again this has been embarrassingly generic and has failed to recognise that some countries like Vanuatu are actually still growing rapidly whilst others like Samoa are facing short term albeit severe economic challenges.

However, given that few Pacific islands have IMF programs perhaps the biggest disappointment has been with the other IFI’s such as the World Bank and the Asian Development Bank. The lack of country specific or even region specific research and analysis has been critically exposed by the crisis as these institutions reveal the lack of in-depth knowledge of the region and are only really able to present “more of the same” generic reform agendas slightly re-worded to place them in the context of the current crisis.

However, in the Pacific we have become accustomed to this. Being so vulnerable it is common for countries to face a series of crisis and the response to be the same generic liberal economic advice slightly re-packaged for the “latest” version of the challenge.

It would be good if this response could instigate more country specific evidence based policy research so that individual countries can be assisted to come up with individual solutions to the challenges they face. Using local resources and combining them with the best from overseas would also help. However, sadly economies of scale mean that such a nuanced response may make this unlikely. Maybe some of the extra resources the crisis seems to have generated for the IFI’s could be used for funding region and country specific research?

In terms of specific issues, on a micro basis there is clearly a need to need to streamline the funding/approval processes and to speed up the disbursement mechanisms so that they are able to reach the intended recipients in time. Furthermore, the increased use of local partners particularly in terms of ongoing long term reporting/monitoring process would be useful.

In macro terms, if one were to apply the same medicine to the IFI’s that they apply to other countries and their struggling development banks then it could be argued that there is clearly a need to rationalise. The delineation between the various IFIs (ADB’s, and WB) is increasingly blurred and may be worth revisiting. Having a plethora of bodies offering similar products (usually loans) tied to generic analysis and conditions may not be the best use of funds.

Laid back and picturesque the region may be but the crisis has highlighted that the “more of the same” generic policy agenda needs to be changed.