Responses: Soren Ambrose, Development Finance Coordinator, ActionAid International (IMF)

1.  ActionAid considers it unfortunate that the G20 chose to focus on the IMF as its main vehicle in responding to the crises’ impact on developing countries.  The IMF’s inappropriate policy conditions during previous crises and in subsequent years were most recently ratified by MICs’ “voting with their feet” in walking away from the institution as soon as they could, some even borrowing from other sources in order to pay off loans early.  We therefore have a difficult time gauging the IMF’s “effectiveness,” since the major problem we see is with the choice of institution.  On a more specific note, one can observe that the IMF has responded somewhat more nimbly to this than to previous crises, but the first question we need to ask is: what could the IMF have done to *prevent* this crisis in the first place, and why did it not do so?  Regarding its interaction with LICs, frankly it appears that the main energy has gone into the MICs.  There is little indication that the new PRGFs or augmentations to PRGFs demonstrate any significantly new elements. The ESF is a step in the right direction, however, in terms of both speed and reduced conditionality.  But given the seriousness of the crisis and the overall persistence of the same kind of conditions we are accustomed to from the IMF, this is a relatively small achievement.  It also does not appear that IMF staff and management have been particularly vigorous in trying to find new, internal sources of funding for LICs; the dances done around the allocation of gold sales profits have been particularly distressing to observe.

2. I do not see an indication that the recent reforms to conditions have played out in individual programs, though I have not examined all of them as closely as I would like. But the first issue I think is the question of these “reforms” – they are not really about the content of the conditions, but rather about the sequencing and enforcement mechanisms.  Many conditions now appear to be ex ante, meaning basically prior conditions which governments must fulfil before getting in the proverbial door.  The fact that structural criteria are now benchmarks suggests to me only that the IMF will save itself the bad p.r. and hassle of so many suspensions of loans, while still being able to apply nearly the same kind of pressure on governments. 

3.  The re-design of the LIC programs remains untested, indeed officially not even approved yet.  I think with the number of questions remaining about how they will operate, it would be premature to speculate on how well suited they are.  The prospect of less concessional loans for purposes designated by the ESF however is a very negative signal for LICs.