Transcript

Transcript of an Oxfam Event on The Role of the Fund in Low-Income Countries

October 2, 2007

Speakers:
John Lipsky, First Deputy Managing Director of the IMF
Abbas Mirakhor, Dean of the Board of the IMF
Dr. Dominico Lombardi, President, The Oxford Institute for Economic Policy, Oxford, UK
Jack Jones Zulu, Programme Manager, Economic Division, Southern African Regional Poverty Network, South Africa

Moderator:
Bernice Romero, Advocacy and Campaigns Director, Oxfam International

MS. ROMERO: First of all, I just want to welcome everybody for taking time out of this spectacular day to join us and for this session. I want to say thank you to the IMF for hosting the event at this venue, and I want to give a special thanks to Jack Jones Zulu, who has flown all the way from South Africa—arriving yesterday, leaving tomorrow—for this event. So we really appreciate the effort and the time that he's taken and given to be with us here today.

I'm particularly excited to be hosting this event in advance of the Annual Meetings and also in advance of a time of transition and change for the Fund with the new Managing Director coming in. We're excited to start the debate and the discussion around some of the key issues affecting low-income countries and the role of the Fund there.

I'll begin introducing today's speakers and the order that they'll be speaking. I have John Lipsky, who's the First Deputy Managing Director of the IMF. We're very happy he can join us because he has very limited time, and we appreciate him as well for making time for us today. We have Abbas Mirakhor, who's the IMF Executive Director for a group of nations, including the low-income countries of Afghanistan, Ghana, and Pakistan. He's also Dean of the IMF Board, which is the important, venerable figure in this institution. We have Domenico Lombardi, who is the President of the Oxford Institute for Economic Policy, a think tank based in Oxford in the U.K. He's also a Senior Scholar at the Brookings Institution and the Managing Editor of the publication "World Economics." He's worked as a senior advisor to a variety of Executive Directors at both the Fund and the World Bank, and, particularly pertinent for today, he's written extensively on the IMF and is currently working on a book—or editing a book—on the IMF's future. And then we have Jack Jones Zulu, who has come, as I said previously, from South Africa especially for this event. He's a Zambian national and an expert at the Southern African Regional Poverty Network (SARPN) in South Africa,, where he specializes in, among other things, aid, debt, and poverty reduction strategies. He's also taught economics at the University of Zambia. SARPN has recently conducted a series of case studies on the ground about donor activities, and we're looking forward to some of those findings feeding into today's discussion.

So what is today's event all about? I think it's fair to say that the Fund is at a crossroads. It's facing a crisis of relevance across the range of its functions. It's come under a lot of criticism of late for its role in low-income countries, and this criticism has come from a variety of actors at various levels from think tanks like the Center for Global Development to its own internal Independent Evaluation Office (IEO).

Civil society has long had different views on this issue, and we're looking forward to today's panel to look at a variety of questions that this brings up. One: there have been reforms in response to these criticisms. Are these reforms really new, or are they restatements of existent policy? Do they go far enough, or are they really just window-dressing for what is going to continue to be business as usual at the Fund?

There are other questions about the new direction under a new Managing Director. What should we be advocating for? Should the Managing Director be taking the Fund into more activities, more work and focus on low-income countries, or is it the other extreme? Should we be advocating for the Managing Director to say it's time to exit low-income countries, as many actors have advocated? If it does happen, is that better than the status quo, or is there a gap, and who's going to fill that gap? Who, then, provides the analysis on macroeconomic stability that's used for poverty reduction strategies and that's used for donors in their lending? There's a variety of questions that we're hoping to probe today, hopefully, to the issue of governance. Should there be more low-income countries on the Board? Should the governance structure be completely changed? And in case you don't know, the answer from our perspective would be: yes. But we're hoping to hear the different perspectives around the table today.

So without further ado, I'll pass on to the speakers. The format's going to be a round of presentations by each of the speakers running about eight minutes. Then we'll open up for question and answers, and we'll take a group of three or four questions at a time. Okay, John, please proceed.

MR. LIPSKY: Great, thanks. Well, I'm very pleased to be able to join you at this important discussion of the role of the IMF at low-income countries, and I'd like to thank the organizers of the panel for bringing this, for creating this event.

I should say at the outset your introductory challenge to us was a broad one, and in eight minutes I don't think I'll cover everything, but I'll be very happy to respond in the question and answer to anything I haven't covered, or that you'd like to.

Now, of course, today's discussion is taking place in an unusual environment that combines some notable reasons for optimism about the outlook for low-income countries, although with justified concern about the emergence of some potential near-term risks. Overcoming the growth slowdown of 2000 and 2001, the global economy subsequently has outperformed consensus expectations.

Who anticipated that sub-Saharan Africa would enjoy its strongest expansion in decades in this period with no slowdown yet in evidence? The latest developments haven't all been positive, of course. The financial turbulence of the past few months has demonstrated that capital markets are globally integrated and that market imperfections can create risks to real economic activity.

Despite these heightened near-term risks, it's still appropriate to contemplate the lessons of the past few years and to think about the possibilities of the coming years. Today I'm going to address these issues as they relate to the activities of the Fund, and as I'm sure you're aware, there's been considerable debate in recent years about the Fund's role in low-income countries. Changes in the global economic and financial environment have presented us with its series of new developments. For example, the IMF's financial arrangements with member countries reached a record high as recently as 2003, only to fall precipitously to low levels at present. But more importantly, as the global economy becomes more integrated in every way, we need to consider what we can do to ensure that our low-income members take full advantage of the expanding possibilities for progress.

The Fund set out to address this and other basic challenges through our medium-term strategy—the MTS, as we call it around here—that was developed beginning in 2005. Some fundamental principles should be kept front and center in thinking about the Fund's role. As I've stated already and as research as demonstrated, the eradication of poverty requires sustained rapid growth, even more rapid than we've experienced in the last few years. To date such growth has been associated with export-oriented, open economy policies. Macroeconomic balance supported by appropriate fiscal and monetary policies helps to sustain expansion. There is no single path to success, as each country has its own challenges. Moreover, each country's own efforts and policies are the dominant factor in creating necessary conditions for substantial progress. At the same time international assistance can be important, and it can be helpful. Each development partner should concentrate on its areas of comparative advantage, but their efforts also should be based on a holistic approach in support of the overriding goals of rapid, sustained growth, strength in institutions, and increased social justice.

Well, what does al this mean for the Fund in concrete terms? First and foremost, we should support low-income countries' efforts to establish and maintain macroeconomic stability as an essential precondition for strong and sustainable growth.

There are encouraging signs of recent progress. Sub-Saharan Africa, as I mentioned earlier, has experienced its strongest growth and its lowest inflation in over 30 years. Output growth there should reach 6.25 percent this year, and we think slightly faster in 2008. The expansion is broad based, cutting across all country groups and is strongest, of course, among oil exporters. Many factors—including the favorable environment for commodity prices—are involved, but the Fund's policy advice has helped countries implement sound policies that contribute to economic stabilization and sustain rising investment and faster productivity gains. Along with the strong demand for commodities, the region also is benefiting from rising capital inflows and in many cases the decline of armed conflicts and greater political stability. Of course, multilateral debt relief also has provided important—in fact, historic—room for maneuver for fiscal and other policies.

So a key challenge today is to build on this momentum and to achieve more tangible poverty reduction. The IMF is helping countries implement the policies and establish the institutions that will help take advantage of the supportive external conditions while at the same time enabling the effective absorption of aid increases. Fund-supported PRGF programs seek to accommodate the full use of aid while preserving macroeconomic stability. Aid volatility calls for medium-term budget planning and stronger public financial management systems. Expenditure smoothing helps to ensure that programs are adequately funded through increased domestic financing or by drawing on reserves, even during periods when aid falls short. Nonetheless, it's also important to strengthen donor coordination and to improve the predictability of aid.

The Fund is helping its low-income members base their programs on realistic aid projections. Fund staff are assisting member countries develop alternative scaling-up scenarios that can be incorporated in poverty reduction strategies. The Fund does not have a mandate to mobilize aid, but we can and we do act as an advocate for increased aid. In particular, we consider it important that donor countries meet their Gleneagles and Monterrey commitments.

Regarding fiscal policy, progress inevitably will involve increased social spending. Thus it isn't surprising that a recent study by the Center for Global Development found that the average increase in health spending as a share of GDP was larger for countries with Fund-supported programs. Indeed, many programs have included floors on social sector spending to make sure that aid volatility won't impair antipoverty efforts.

Helping countries to make better use of aid flows through strengthened institutions is an integral part of our work. The Fund provides a wide variety of technical assistance to low-income countries spanning virtually all facets of the Fund's expertise, including budget management and tax policy, financial sector reforms, economic statistic gathering, and legal reforms, as well as economics training of country officials at the IMF Institute in Washington and in a number of centers overseas. In fact, one-third of all Fund technical assistance in the current fiscal year is being devoted to sub-Saharan Africa.

We are continuing to refine our policies in support of our low-income members. In particular, the Executive Board soon will consider the Fund's role in the poverty reduction strategy process, the Poverty Reduction Strategy process and in donor coordination. We will clarify expectations as to the Fund's role and establish a consistent institutional approach to collaborating with donors and stakeholders. We also are developing a Joint Bank-Fund Management Action Plan with our World Bank partners. This plan is intended to help ensure that the efforts of our key institutions remain well coordinated and consistent while leveraging each institution's resources effectively. The plan is scheduled to be considered by both Executive Boards before next month's Annual Meetings.

So to conclude these brief remarks, I would like to underscore that the economic prospects of the low-income countries depend on their successful linkage to the global economy. A dynamic private sector and an efficient financial system are key to raising the growth potential of low-income countries. The public sector also helps to create the possibility of faster growth by providing a stable and predictable macroeconomic environment by reducing the cost of doing business, by infrastructure investments, by providing health and education services, and by other sectoral reforms, including through improving financial and other regulations, and, of course, by working to reduce barriers to increase trade.

Now, the IMF is committed to helping strengthen its low-income members in all these areas, and we will continue to work closely with our partners in this effort.

Thanks for your attention, and I look forward to our discussion and rest of the afternoon. Thank you very much.

MS. ROMERO: Thank you.

(Applause)

MR. MIRAKHOR: It's not easy to follow John, but I'll try. The list of questions that you put on the table, as John pointed out, was very broad, Bernice, but I had three questions posed here in the announcement: Should the IMF exit low-income countries, or do the world's poorest nations depend on the IMF not only for macroeconomic stability but growth essential for poverty reduction? Or is the answer somewhere in between? And we'll see, when I respond to the first two questions, you'll see the third one become reasonably irrelevant.

First I have to put in a disclaimer. It says the Dean of the Executive Board. It's a fact of life, we all have to live with it, but that doesn't mean I speak for the Board. John speaks for the whole of the institution, but I speak for myself here as an individual Executive Director. John can speak for the entire Board, for management and staff and the Board because he speaks about the policies that the Board has already approved and the management is to implement. So these are all personal views that I will express here. It has some drawbacks, but it has advantages. John can't speak his mind; I can, and I will try in the short period that's available to me to try to do the best I can to answer those first two questions.

Should the IMF exit low-income countries? My answer is simple and unequivocal: No. The IMF role in macroeconomic stabilization and the growth of all its members, including in LICs, is undeniable. The legal aspects of this question were clarified in the mid-1980s based on the Articles of Agreement, particularly Article I, which sets out the purposes of the institution. Of course, Mr. Lombardi will, I'm sure, address some of these questions, which he had already covered in his earlier working paper at the Fund in 2005. But also, Jim Boughton has covered it in his history, I guess, the last edition that came out of history of the Fund.

The Articles of Agreement, as you know, are in effect a contract between the institution and its membership. The Executive Board reiterated this role in its policy statement adopted on August 30, 2004, which not only reaffirmed the IMF's role in the LICs, but clarified the objectives and responsibilities of the institution in these countries. The statement emphasized that the IMF supports the LICs through three complimentary channels: policy advice, capacity building, and financing.

Since the stability and growth in all member countries are major concerns of the institution, as an integral part of its purpose, it would seem odd indeed to deny a role for the IMF in the LICs when similar growth and poverty considerations, as well as distributional issues, are routinely addressed in other countries. Moreover, global financial stability and growth cannot be sustained if large areas of the world remained poor and vulnerable to a wide range of shocks. As you know, global financial stability is also a concern, a major concern, of the IMF in the statement of the purpose of the institution. These and other reason underline the imperative for an active involvement of the IMF in the low-income countries.

Moving to the second question, the world's poorest nations have indeed a right to depend on the IMF, not only for macroeconomic stability but also for growth and poverty reduction. This right is conferred upon them by the virtue of the membership in the organization and the acceptance of the obligations of the Articles of Agreement. In doing so, each member gives up a part of its economic sovereignty to the IMF. The Articles of Agreement, in turn, impose an obligation on the institution to provide policy advice and at times financing to help members achieve and maintain macroeconomic stability and economic growth.

The question, therefore, shouldn't be whether the IMF should continue to assist LICs to achieve high growth and poverty reduction but the extent and quality of its role. I shall not dwell on these issues here. I hope that Mr. Lombardi would address some of them. They have been evaluated and considered extensively by various forwards in various documents. In my view all stakeholders involved need to turn to the important question of what needs to be done going forward.

LICs are at a critical stage of the development process. Most have managed to regain a modicum of financial stability, and, of course, John covered some of the good news that is coming out of the low-income countries, particularly sub-Saharan Africa. But then again, there is a lot left to be done. The poverty reduction strategy process has been helpful in initiating the rise of a culture of ownership and policy dialogue between national authorities and stakeholders. It has contributed to the recognition that social spending has to be given priority and has raised awareness about the importance of the investment in infrastructure. Debt relief has been instrumental in kick-starting higher growth and in improving t he sustainability of debt and is preferred in a number of LICs.

Despite this progress, process in poverty reduction has been uneven among LICs. For one thing, the promises of scaled-up aid to help these countries finance the much needed investment in infrastructure remain unfulfilled. The 2007 Global Monitoring Report suggests that merely seven years after the UN Millennium Summit, at which the Millennium Development Goals (MDGs) were adopted, there has yet to be a single country case where aid is being significantly scaled up to support a medium-term program to reach MDGs.

Additionally, the Monterrey Consensus stipulated that the sustained political and economic reform in the LICs would be matched by direct support from the developed countries in form of aid, trade, debt relief, and investment. The LICs have demonstrated a strong commitment to reform. Government accountability, financial stability, and growth have all improved in these countries in recent years. The achievements, however, have not brought forth the promised aid. It is becoming clear that the present level of improvement in economic growth, even if it were to continue at its present pace, is not by itself sufficient to allow the LICs to achieve the MDGs. Their growth rates have to accelerate to allow more rapid poverty reduction.

This has to become the objective of all stakeholders—and in short order. It is time to focus on how to get to get these countries to grow faster. Fortunately, economic growth is no longer the puzzle it used to be. Both theoretical and empirical evidence suggest important factors that hold the most promise for faster growth: infrastructure, institutions, and financial development.

The international community, particularly the IMF and the World Bank, should focus more on these important elements and less on territorial imperatives and turf battles. These two institutions have the expertise, resources, and responsibility to target these three important elements cooperatively and efficiently. For example, they could create joint facilities to address and quickly design and develop these elements. First, as an example, they could develop a joint financial sector facility. As I said, financial development is now a crucial factor or has been recognized as a crucial factor as a growth-enhancing effort. This facility would ensure a smooth graduation of LICs from official to market-based financing. This facility could have a five-year duration. It would less concessional than of then the present PRGF, but with a lower rate of charges than the SDR rate with the difference compensated by grants from donors. In order to ensure a smooth transition to market-based financing, the program supported by the facility would be anchored on sustainable debt thresholds to give confidence to donors and the markets that the country is committed to following sound policies that would allow it to gradually reduce reliance on concessional donor support. The program supported by this facility would target the broadening and deepening of the domestic capital markets, provisional financing to small and medium enterprises, and development of microcredit institutions, and the ability of the country to achieve international ratings and access to international capital markets. The facility would also expand the current work of the IMF and the World Bank on strengthening medium-term debt management strategies to assist LICs to develop cutting-edge debt management capability.

The second suggestion would be a joint institutional and infrastructural facility targeted to the rapid removal of infrastructure bottlenecks that at present impose the greatest constraint on growth acceleration and development of growth-reinforcing institutions. This facility would also be designed with a lower concessional element than the present World Bank's PRS or the IMF's PRGF, supplemented by donor grants.

These are some ideas of how to go forward, because we can sit and discuss whether or not a Fund should have a role of—there will be people who say yes, and there are those who will say no. The problem is that we need to advance the cause of the low-income countries. The models have been successful in some countries, including one that I serve, and that's Ghana. And I certainly hope that if the two institutions try to create a framework for the donors to do their scaling up within that framework—perhaps to do these kind of facilities I was suggesting—that perhaps achieving the MDGs by the time that it's stated would be a possibility. Thank you very much.

(Applause)

MR. LOMBARDI: First of all I want to thank Oxfam and Ms. Romero and Ms. Stuart in particular for inviting me to join such a distinguished panel today. And, of course, the pleasure of being here is compounded by the fact that I spent the most professionally rewarding years of my life in this institution.

The questions posed to this panel by Ms. Romero are all challenging indeed. Let me be straight: I think there are no clear-cut answers. In fact, most ground has already been covered by Mr. Lipsky and Mr. Mirakhor. In my brief remarks, I will touch upon why the IMF should engage with low-income countries and how. And then the status of the IMF policies toward low-income member countries by pointing to the main challenges.

Given the time constraints, I want to be able to elaborate on the governance issue, but I had the chance to express my views in a paper published last year with Professor Ngaire Woods. To be sure, even the founding fathers of this institution had trouble grappling with these issues. Convened at the end of the Second World War,, the Bretton Woods Conference aimed to establish a universal financial and economic quota with a general applicable solution to the problems of the world. The participants carefully avoided distinguishing between the groups of members in drafting the IMF's Articles of Agreement;. the Indian delegation proposed their reference to the role of the IMF low-income countries, but the proposal was ruled out.

In all fairness, it was all in subsequent years that the developing world would define itself politically and economically. And as the newly independent low-income countries would join the membership of this institution, the Fund would gradually find itself drawn into an endless debate, one that continues at this very moment here. Only a few days ago, for instance, I was looking at the IMF's website, and the headline read something along the lines of, "The IMF moves to clarify its role in low-income countries." So should the IMF be effectually engaged with low-income countries? The answer is, of course, yes, and as authoritatively stated by Mr. Mirakhor. And just to be clear, this goes well beyond the simple juristic observation that low-income countries now account for the largest share of the Fund's clientele. In fact, as I argued in some previous research, the IMF is now the universal financial institution with 185 members, of which 78 are low-income members, or approximately 42 percent of the entire membership. The purposes of the IMF, as it tells you in Article I, apply to the low-income member countries as much as they do to all the other members.

The IMF mainly exerts an informational role for the benefit of its membership by providing a bundled set of activities. And Mr. Lipsky was very clear that included lending, policy advice, capacity building. Low-income members tend to potentially enjoy the greatest benefit, given the lack of incentives of the private sector to undertake costly information-gathering activities. So despite all sorts of resistance coming from within and outside the institution, the IMF has now definitely acknowledged that it has a role to play with low-income member countries. This goes to the full credit of the institution, but the how-to's are no less important than whether to do it or not.

In low-income economies, the policy space is not neatly partitioned between traditional macro policies and poverty-reducing policies. In other words, as an econometrician would say, the two sets of policies are not orthogonal. Macro policies, for instance, tend to affect the efficiency with which economic growth translates into a poverty reduction, and operationally this points to the need for greater awareness of the social impact of key macro variables and policies. Thus, any assessment of the effectiveness of the IMF's role in low-income countries should then consider the extent to which this dimension has been operationalized in the institution's policy toolkit.

I'm afraid that in this area the scoreboard is less favorable. Evidence available so far points to the full intentions, and as Mr. Lipsky was mentioning there, there have been a number of IEOs' evaluations, and also recently a briefing note by Oxfam and other members of the civil society. I will try to summarize those tensions as follows. First is that poverty social impact analysis has not systematically informed distributional aspects in Poverty Reduction and Growth Facility (PRGF) program design, despite Board-approved policies that it should. Then there's the need to include sectoral aspects into the analysis of aid absorptive capacity beyond traditional macro aspects. Finally, I would say the need to make more effective use of the Poverty Reduction Strategy Paper (PRSP) as a basis for the PRGF—rather than the other way around. In all three respects, it is possible to observe some common pattern that the IMF is definitely doing something, just not enough, and by its own standards.

Take the social impact analysis. In 2005 the IMF set up a stand-alone Poverty and Social Impact Analysis (PSIA) unit, going beyond the advice given by the external panel on the evaluation of the Enhanced Structural Adjustment Facility (ESAF) that recommended instead to rely on the World Bank. Yet there appears to be no evidence of any systematic influence of PSIAs on PRGF program design. Or, third, their findings are duly reported in PRGF documents.

Take, too, the analysis of absorptive to capacity. It mainly focuses on issues such as Dutch disease and competitiveness, which the IMF's IEO in many cases found of no concern for the levels of aid inflows under discussion. In assessing external financing requirements, the IMF does not sound out donors before coming up with an aid figure that reflects what is likely to be available. This figure is then fed into the medium-term macroeconomic and expenditure planning. The issue, however, is that once this forecast becomes the IMF's own assessment, it does indeed carry weight with regard to donor ability and willingness to fulfill commitments. In other words, the very fact that the IMF says that the certain level of aid inflow is likely to materialize, affects the likelihood that such an assessment will come true.

So why not fully leverage on this by highlighting more ambitious, but still feasible aid scenarios, consistent of course, with country absorptive capacity? Why not assist member countries in designing macro frameworks compatible with such alternative assessments? This would certainly be consistent with the findings of the literature on the catalytic role of the IMF, whose findings have generally been found more robust in the case of low-income countries.

Finally, take the relationship between the PRGF and the PRSP. When the latter was introduced, it was meant to reflect national ownership of underlying economic policies, but once again the evidence appears to be more controversial, with the PRGF sometimes providing the operational of framework for the PRSP, to use an understatement.

So, I'll give you just one more example and then conclude. A publication from the IMF in 2003 listed all the contributions made by the IMF in macroeconomic research in low-income countries. They include about a thousand research papers drawn from growth and poverty, fiscal and monetary policy, financial market issues and structural reforms and so on. Yet, again, zero percent of operational staff uses the findings of the IMF research department in their operational work, according to the IEO.

So, what to make of this? Looking forward, the Fund should consider the following three challenges—and I'm assured by Mr. Lipsky's remarks: First, how to fully operationalize its own policies against transparent and internationally agreed benchmarks for which the institution should be held accountable. Mixed signals should be avoided, such as, for instance—as it happened—endorsing the MDGs without operationalizing the related implications.

Then, second, how to leverage its coordinating role and proactively partner with the World Bank and donors in highlighting more ambitious but still but feasible external financial requirements.

And, finally, how to frame more effectively the partnership with the World Bank beyond the usual statement that cooperation is important. Experience shows that when the incentives to cooperate have been fully institutionalized, stressing the case of the Highly Indebted Poor Countries (HIPC) initiative, the Financial Sector Assessment Program (FSAP), debt sustainability framework and so on, the results do follow.

So, all in all the institutional and human capital is huge. We all know that. But its weight, I'm afraid, has yet to be thrown in low-income countries. Thank you.

MR. ZULU: Let me, like my colleagues, take this opportunity to thank Oxfam for inviting me to come and be part of these exciting discussions this afternoon.

I want to start with a quotation from Dr. Kenneth Kaunda, the former Zambian president, who on the first of May 1987,,the day when Zambia divorced the IMF said, and I quote: "The problem with the IMF is that even if you have diarrhea or cancer, the prescription is the same. And the IMF is causing social unrest in my country. I have thus decided to divorce Zambia from the IMF." Twenty years down the line, this year, Dr. Kaunda had this to say, and I have a newspaper with me, which I bought in Zambia two weeks ago, and this is what Dr. Kaunda said. The title says "IMF-World Bank polices have brought poverty." Let me just read.: "The International Monetary Fund and the World Bank are still imposing unpalatable prescriptions for poor countries' economic recovery and development, Dr. Kenneth Kaunda said. Dr. Kaunda said that IMF and World Bank economic prescriptions impose on poor countries that brought—sorry, the article continues inside—"had brought about high poverty levels and undevelopment."

I think that's a good starting point for me, coming from the South, in terms of looking at the role of the IMF in low-income countries, with that political voice coming from Dr. Kaunda. Of course, it's not just Dr. Kaunda. We hear similar voices from all quarters in terms of what the Fund has been doing. Of course, it's not just the Fund. It's the Fund, the World Bank, and the WTO, and of course it's also fair to say that it's not everything that the Fund or the Bank or the WTO are doing in Africa that is bad. But it's some of the issues I think where they've gone wrong. And, again, quickly connecting that voice of Dr. Kaunda to some of the studies that I have been reviewing on behalf of a partner organization based in Zimbabwe, this partner organization is called the African Forum & Network on Debt &Development (Afrodad) that commissioned five studies in Ghana, Burkina Faso, Mozambique, Tanzania, and Uganda looking at the second-generation PRSPs in terms of policy frameworks, monetary issues of linkages between the PRGF and PRSP, budgets and things like that. One of the interesting findings or issues emerging from the studies is that the IMF continues to dominate the macroeconomic policy frameworks in these countries, and therefore there is little space for national governments as well as other stakeholders to own these processes.

Another issue emerging from the studies is that although there is broader participation in the second generation of PRSPs, macroeconomic policies are still in the domain of the IMF. Again, the studies state that formulation of macroeconomic policies is explicitly stated as one of the key pillars of the PRGF. But, yet, what we see is the discussions still remain an almost exclusive preserve of the Fund, and a few selected government officials, many from the Ministry of Finance. And this lack of participation and the limited alignment of the PRSPs and the PRGFs represents severe limitations to the potential ownership and poverty reduction impact of Fund policies in Africa and elsewhere. In short, this means that the policy space in the poor countries is still controlled by the IMF. This is what is emerging from the five studies.

Now, I want to quickly throw points around, because most of the issues have already been covered and I don't want to belabor the same points. But fiscally, I think the concerns that we have as civil society in Africa—Southern Africa in particular—relates to the manner and way in which the Fund intervenes in our economies, in particular when you look at issues like policy-based lending and the issues that go with that. one of the issues I think we've been grappling with is the insistence to cut down public spending as a way of containing inflation. This of course has been debated—not just here but in various fora. We feel that for as long as the Fund does not relax its grip on fiscal and monetary policies, it's going to be very, very difficult for these countries particularly those that face the challenge of HIV-AIDS and high poverty levels to sort of expand their public spending and deal with these challenges. And, of course reading some of the papers coming from the Fund, they are saying they will exercise flexibility, but then that flexibility is not clearly defined. No one knows exactly what they mean and to what extent again they can allow that flexibility. So I think there is consent, generally speaking, but it's one area that is stifling development in the low-income countries, particularly tight, fiscal monetary policies.

Again one wants to say that the same conditions that are attached to IMF loans directly hit the poor who have no social sustenance, and yet what we see is that our government continues to buy fancy cars and spend the money on luxuries without the Fund raising its voice. And we see that as a contradiction. One would have hoped that they had also dealt with that issue to ensure that the government does not misuse money, but what we see is government spending a lot of money on fancy cars and other kind of luxury goods. But the aid expenditures on the key sectors, such health and education, tend to suffer from reduced spending.

Going quickly through some of the challenges that we face, particularly when you look at the quest for countries to get to the HIPC completion point, the triggers that were attached to the whole issue of HIPC, one can clearly see that some of the policies work against the poor, in particular, again, when you look at the macroeconomic framework, again, that I want to return to. And, of course, the structural issues that were tight in their conditionalities, those huge public outcries that the Fund was actually stepping on the toes of the poor, and again when you read some of the research works that have been done by Eurodad, Jubilee Zambia, Afrodad, and others who can clearly see that actually these policies are proven to be adverse to the poor in our countries.

I want to quickly talk about something that is very, very critical, and this is the issue—for lack of a better term I'll just say the double standards that we tend to see, in particular when it comes to issues of liberalization and also the issue of subsidies. Whilst a number of countries or countries in Africa generally are advised to remove subsidies on agriculture, we don't hear the same voice by the Fund or the World Bank to the European and OECD countries to remove their subsidies. This to us is a contradiction, and we feel that the Fund should be consistent in some of these policies, but yet we don't see that.

And, then, the issue of wage ceilings. I know recent papers are saying that the Fund is going to flexible, and of course they've not said how much should be spent on the health or education, but studies have also shown that actually, because of wage ceilings, a number of countries are constrained in terms of the number of doctors, nurses, and other health personnel that can be hired. This has proven to be a challenge for our countries to move forward, particularly given that we are facing HIV/AIDS.

And also one would want to quickly inject a small thought here on the case of Zambia. We thought that that bordered really on policy mischief in an environment where poverty labels are so high and HIV/AIDS is rampant in the country. The majority are not working because there's liberalization that caused literally our economy, industries to collapse, and things like that, and then in the midst of that you introduce cost-sharing schemes or user fees. That was a direct punishment on the poor, and we thank the Zambian government and others that ignored some of these things. And of course other countries are using debt relief to find health care delivery (off mike), but we thank those governments that are ignoring some of these policies, because they are injurious to the poor.

And also one would want to quickly say that I think literature is clear. For instance, if you look at what happened to Russia in the early 1990s by sticking to the Fund advice, we saw what happened to Russia. It went into a recession. China today is clearly growing because it does not take in some of the advice that is coming from here. And you would also want to point at Argentina and what happened with the involvement of the Fund there. So, there are lessons that we can learn from some of these things that have happened, and we feel that the current role of the Fund in low-income countries, as it stands, is not very useful. I think we need to move to more useful ways, and that, of course, would mean allowing more space for these governments to be able to determine their own course.

Let me quickly, before I conclude, say something about macroeconomic stability. Terry McKinley and Anis Chowdhury and of course others have clearly shown that this fear for the Dutch disease actually need not arise if the central banks as well as the Minister of Finance and others can work together and coordinate their efforts until countries can be able to absorb it without upsetting the macroeconomic fundamentals in the economy. And therefore I think what is important for low-income countries is to ensure that there is coordination in terms of policy. Otherwise, the Dutch disease is neither here nor there. I mean, that's what Terry McKinley argues.

And let me also say that for us in Africa the issue is not just achieving macroeconomic stability, though that is very essential for growth and poverty reduction. But I think stability has to go along with other sets of policy imperatives such as debt sustainability, cautious trade liberalization, promotion of fair trade, job creation, promotion of sustainable livelihoods, poverty reduction, and good governance as endorsed by the heads of state and government in the U.N. General Assembly of September 8, 2000. Dr. Pete Henriot, the Director of the Jesuit Center for Theological Reflection in Zambia, had this to say: "There is too much focus on macroeconomic figures and little attention to human development indicators, too much business as usual despite promises made to change, and too much isolation from dynamic interchange with the civil society. All this has contributed to bad policies and strategies, sad outcomes and impacts." Yes, one would want to say macroeconomic study should not be seen as an end in itself—but as a means to an end.

And by way of concluding, again, just an observation that we have a civil society in Southern Africa. Many times when the mission teams come from Washington into our countries, there is always this aspect of consultation, which is very good and I think we need to entrench consultation as a part of good governance. However, the kind of consultations that is taking place in our countries is not very, very useful. We find them a sheer waste of time. The Fund would normally meet civil society after it has already sealed the business with our government such that the issues that we raise have no consequence on the official agenda that is already closed. So, one would want to say that the Fund needs to listen to civil society, that it may be more in touch with ordinary life struggles than a bureaucracy caught up with maintenance of institution and programmatic commitments carried over from the Structural Adjustment era.

As I conclude, I want to say this about some of the policy impositions, particularly when you look at the market reforms that are taking place in a number of African countries. I think for us the point is that the free market ideology that pervades IMF thinking and policy analysis suits multinational corporations perfectly. Small and less developed economies, many of which are in Africa, are not able to compete effectively. Therefore, imposing free market policies on economies that are not ready leads to massive problems. Zambia, Ghana, Malawi, Lesotho and Swaziland, among others, are good examples of what liberalization can do if it is not properly managed. And, like I said, China's been able to grow by leaps and bounds by ignoring some of these policies, while Russia in the 1990s went into heavy recession because of sticking to some of these policies.

An Oxfam paper of 2003 entitled "IMF and the MDGs: Failing to Deliver for Low-Income Countries" gives us three important points that I thought I could conclude with in terms of what the Fund needs to do. One of them is that the Fund needs to show greater flexibility in its economic targets, demonstrating a longer-term focus on poverty reduction and analyzing the tradeoffs. This entails short-term economic policy.

Secondly, the Fund needs to end its pessimism towards increasing aid flows to poor countries and stop designing economic policy around this view. Instead, it should play a dynamic role working with others to measure the financing needs to achieve the MDGs and proactively mobilizing aid flows. It should use its technical expertise working with the governments who design macroeconomic frameworks that can accommodate these increased resources.

And, finally, the influence of the Fund as gatekeeper for poverty-focused aid needs to be decreased. The IMF has a key role in achieving the MDGs, but as one partner in an alliance for poverty reduction, and not as the all powerful on-and-off switch for aid and debt relief. Thank you very much.

MS ROMERO: I want to thank all of our speakers for their remarks. Three of the panelists very explicitly said the Fund has a role to play in low-income countries. But all of them went into quite specific ways in which that role would need to improve—everything from better coordination, to very specific joint structures with the Bank and other donors, to implementing more effectively in program design some of the tools in research and evaluation that the Fund already has in place, to really looking at the impact that the policies have on the ground and opening up economic policies and fiscal policy space.

So, let's open this up to questions and answers to explore some of these ideas further.

Sir, could you identify yourself, your institution, and who you would like to address your question to?

QUESTIONER: My question for Jack is what message in terms of advocacy initiatives would you like to see U.S. NGOs play to address some of these issues you've discussed today?

And my other question is to Mr. Lipsky. Regarding one of the studies you mentioned early, the Center for Global Development study, that study actually had a couple of findings, one of which was that the fiscal and monetary policies were unnecessarily restrictive in IMF loans, and I don't know if you think that that paper is correct or not—assuming that paper is correct. Regarding another paper that was done recently, as mentioned today, the IEO study from April on 29 sub-Saharan African countries, one of the findings of that report really shocked aid advocates. It found that only 27 cents of every dollar of additional aid spending between '99 and 2005 was actually spent because of currency reserve policies and inflation reduction policies. So you have a huge amount of foreign aid that's intended to be spent that isn't being spent because of policy that the CDG paper found unnecessarily restrictive. My general question is, given that context, it makes it very difficult for NGOs to ask the U.S. Congress or other northern donors to give more foreign aid, so as the U.S. Congress prepares to give money to the World Bank's International Development Association or to increase money for HIV/AIDS, how do you think the U.S. Congress will react to the findings of the IEO report if so much of that money that Congress gives intending for it to be spent isn't being spent? How do you think Congress will deal with that? Thanks.

MS ROMERO: More questions?

QUESTIONER: I was wondering what the IMF has learned over the last few months over China's spending in Africa? And how does one balance out the Fund's policies when it comes to official donors and those of emerging lenders, like China?

MS ROMERO: Can we take a third? Okay, if not, let's start with Jack answering the question about his advice to NGO advocacy here in the States.

MR. ZULU: Thank you very much. I think it's an important question. Given what I've said in terms of our engagement around issues of macroeconomic frameworks and also what is imagined from the studies that Afrodad did, we want NGOs in the U.S. —and of course also to help us deepen and broaden the space of engagement in these frameworks—like the study is clearly not—discussions around macroeconomic frameworks are still a preserve the Fund and the few selected government officials in the Ministries of Finance. We don't have sufficient engagement there. Of course, other areas like HIV/AIDS, land, and all these things—discussions are there but I think it's the macroeconomic frameworks where we still have challenges. But also we need to strengthen our bonds and linkages in terms of building capacity to be able to allow us to engage in a meaningful manner in these discussions, because I think what is critical is not so much the quantity of engagements but the quality of engagement. You guys up here in the north who've been running these issues for some time I think we need ask you to help us to build the capacities down there so that we can meaningfully engage in discussions with the Fund and the Bank as well.

MS ROMERO: John.

MR. LIPSKY: Sure. Thank you. We've had a couple questions and also some of the speakers have raised some issues, so let me just make a few broad remarks. Many of the comments and certainly reflect a series of commentaries that have accumulated over the past few decades, and it seems to me that happily we're in a somewhat different situation than the ones that those criticisms apply to. I'd point to three broad facts on the ground. One, I think that we've now seen some results, as I mentioned in my remarks, from the kind of policies that are necessary to produce sustained rapid economic growth as a sine qua non for poverty reduction. Those inevitably involve the combination of open economy, export-oriented policies in combination with structure reforms and macroeconomic balance. We feel like we have a fair amount of confidence that that may not be the only way to success, but that has been where we've observed the kind of success that we want to see.

Secondly, in many countries where we've seen in the past sustained poor performance and structural difficulties, there has been in the last few years substantial progress. That has opened up new possibilities in terms of aid absorption and prospects for growth specifically, as I mentioned in my remarks. Sub-Saharan Africa is now exhibiting the fastest general growth rate in more than three decades. So something is going right, not wrong, and that's very pleasing.

One element to that has certainly been not only better policies and the better international economic environment, but also debt relief that has provided very large-scale resources to the LICs. So far 22 countries have reached the HIPIC initiative completion point, 17 of which are in sub-Saharan Africa. And the total commitment by all creditors for debt relief is now almost $33 billion—a very substantial amount—of which a significant portion of that, about 10 percent, is the Fund's own share. We could go on, but this is a new fact on the ground that has helped change the dynamic.

With regard to the specific questions about the reports, for example, the Center for Global Development Report, on the Fund. Essentially, that report said the Fund had been persistently too pessimistic in its assumption about aid flows. I think the point is debatable. But again, it's a situation that reflected a different reality prior to massive debt relief and prior to the improvement in the macroeconomic performance of these countries that has allowed, I think, greater opportunities and greater flexibility in terms of policy prospects. Remember, back in the nineties, you were dealing with countries that were growing very poorly, with very high inflation and great instability, and that created different kinds of policy challenges than hopefully we have today. In broad terms, again, we must be doing something right, as the situation on the ground has improved very substantially.

I also received a question specifically about Chinese involvement in LICs and aid. As you know, this is an area in which the debt relief initiatives have created enormous opportunities. The international community wants to make sure that debt sustainability is preserved and that we don't end up with LICs returning to a situation of excessive indebtedness, inducing policy instability and strains that we would want to avoid. Of course, there is a general principle that for LICs under the current circumstances, in general, aid should be on concessional terms and that that should apply generally. I think there is agreement that that is appropriate.

So, in broad terms, I think again the important facts are greater certainty and a demonstration about what policies produce success, actual success on the ground relative to previous performance, and I think hopefully a positive attitude all around about achieving new progress. Six and a half percent average growth in sub-Saharan Africa is quite an achievement, but it is not enough. In this area, if there is going to be meaningful poverty reduction, still faster growth is necessary. It is probably worth mentioning—I didn't mention it in my remarks—that, for example, the Fund is working very closely with our partners across the street in the World Bank on a set of pilot projects addressing exactly the kind of issues that are deemed important: financial sector development, public finance management, natural resource management. That is going to help provide some templates for even more effective and coordinated action of these institutions in the future.

MS. ROMERO: Okay. Any more questions?

QUESTIONER: Mr. Lipsky has mentioned a couple of times that faster growth is important. A couple of the panelists have focused very strongly on faster growth or improving growth. I just want to make the point that growth is not the solution to everything. Mozambique is a really good example. It grew at 8 percent in 2005 in the context of a famine. So how does that growth translate into improved well-being for people on the ground? My question then would be: is just faster growth the important issue? I know you'll say yes, but does quality of growth matter? How is the Fund incorporating that into its both advice and loans?

Also, I want to raise the issue of the Poverty and Social Impact Assessments again. Mr. Lombardi raised it, saying that the Fund does have its own PSIA unit now and that the track record for integrating the PSIAs' recommendations in PRGFs has been poor. So if you could elaborate on that a little bit. Then maybe, Mr. Lipsky, if you'd like to respond by saying what the Fund is doing to improve that track record. Then, Mr. Zulu, does it matter? Have you had any experience with PSIAs and do you have any hope that the Fund's PSIAs will make a difference? Thank you.

MS. ROMERO: I saw somebody else's hand up back there.

QUESTIONER: I have a question perhaps for Mr. Mirakhor about the role of governance in this whole process. The picture that emerges from some of the material we discussed is one of the Fund and the Bank as dominant actors, intervening rightly or wrongly with little consequences in poverty reduction. However, my own experience is one that echoes what Mr. Lipsky said, that the policies of the countries of themselves are a dominant factor. Here, I would like to inject the issue of governance, which in my view is also on a par with that. To what extent is it possible for us to really be involved and be effective unless governance issues are at the forefront and are dealt with?

MS. ROMERO: Thank you. John, would you like to start with the question on poverty reduction and on growth?

MR. LIPSKY: Sure, I suspect you would suspect I would say that growth isn't everything. But it is the sine qua non for poverty reduction. There won't be poverty reduction without faster growth. There just won't be. We're not talking about one year's growth. This is sustained growth, sustained over years, sustained over decades. That's what it will take, and so policies will be important, and policies that produce faster growth are going to be essential.

With regard to the PSIAs, in fact we're hopeful. As you know, we've created a dedicated unit on PSIAs. There is a certain amount of experimentation involved, and the notion that this hasn't been an effective approach strikes me as far too premature. In many cases, there are barely data available in which to make systematic assessments of, for example, the distributional impact of spending. This is not a simple or an easy issue that simply if you want to do it, you can do it just like that. I can't promise magic answers, but the intention is there. In other words, the issue is whether we are taking adequate cognizance of the distributional impacts of economic policies. The answer is: of course, we're doing as best we can in a situation in which this is not an easy issue to accomplish in the context of the kind of macroeconomic policies that the Fund deals with as opposed to specific projects or things of that nature.

MS. ROMERO: Jack, would you like to respond to the impact of the PSIA?

R. ZULU: Yes. The answer is yes, the PSIAs really matter, although in Zambia, we have not experienced them. I think there was one that was done by the Bank on agriculture and, of course, there was a very lengthy discussion or engagement with civil society. But these are important to the extent that both the Fund and the Bank have a significant role in our economies, it is only fair that we put or we measure the impact of these policies and put them into public discussion. Particularly when the PSIA is done ex ante, then it gives us sufficient space to know the likely impact of these policies. So I would want to say: yes, we need them. Whether the IMF wants to make a difference, I think only time will tell, but for now what I can say is that we need to have Poverty and Social Impact Assessments. They are critical.

MS. ROMERO: Thanks.

MR. MIRAKHOR: Thank you very much for asking this question on governance. I think it's very crucial, very important. This is now my 19th year of dealing with countries that would be considered low-income countries, and I see in the audience a number of faces I have seen in action as Fund staff members in some of these countries.

But let me just make a digression here. As I said, I am in a position to say things that perhaps John is not. One of the problems we have about the Fund and the criticisms that are leveled against it is because the Fund is not present in fora where these charges are made, and generally they are made by people who really don't have the record or the experience of what the Fund is doing in these countries. The IMF is really a very easy fall guy. Anybody can blame anything on the IMF without really having the information that would be needed in order to judge fairly what the role of the IMF has been in countries, whether good or bad. Generally, it's always the bad examples that are on the minds of people, and the good ones are always forgotten.

Three North African countries are in my constituency, so I can speak for them, Morocco, Tunisia and Algeria, all of them are better off because the Fund was there to provide the advice and programs and financing to help them through. I was really surprised when Jack referred to Ghana as one of the countries where apparently devastation has been brought based on IMF's role there. That's not true. Ghana is far better off now, walking along hand in hand with the IMF for the last five or six years. That's one of the countries where the growth rate is 6.5 percent and going up. But there, the question was governance. Up until 1990, the governance in that country was not anything that one could really be proud of. But one is proud of the governance roles and reforms that have been undertaken there over the last six or seven years. Since 2000, the government has really attempted to change and reformed the institutional structure and the political structure to allow people more voices.

That's why I emphasized, frankly, the question of institutions that nobody is paying attention to. We're now talking about lessons we should have been talking about in 1990. Everybody's issues—frankly, including partly Oxfam's issues—are issues that are already irrelevant. I tell you we are just barking up the wrong tree. We are out of time, out of tune and are raising issues that really at the moment are not relevant to any of these countries you are speaking about. If you're on the ground, you see what the problems are. Right now, for example, in Ghana, there is a problem of infrastructure. There is nobody there to say: "Here is additional money. Build yourself a road." I can tell you 50 miles of railways can increase export revenues for Ghana from lumber, from everything else that is exported, about half a percent of GDP. $50 million, it's hard to raise. The same goes with energy. The same goes with power. It's not whether the IMF in the 1990s gave them a wrong target on reserve. It has nothing to do with that stuff.

The problem is now we need to make sure that the growth is accelerated. In order to do that, you need the IMF. You need the World Bank. You need the donors, but donors have to provide funding within a framework, and that framework has to be provided by these two institutions. You cannot, as Jack was suggesting, create something altogether new, a new animal, a new creature, should the Fund get out. Well, what happens if it gets out? What amount of help it has provided countries to grow won't be there and if you get the World Bank out.

So you give policy flexibility to countries. What can they do with policy flexibility? Right now, they need to be able to work within a framework. I'm speaking again from the experience we've had with countries. Right now, Ghana is really providing the best conditionality to the IMF. It says if you want me to have a Policy Support Instrument (PSI), you have to help me develop my domestic capital markets, you have to help me access the international capital markets, and you have to help me to set up real first-class, cutting-edge technology for management capacity. This is what the authorities of Ghana are saying, and sub-Saharan Africa, they want the Fund to be involved and the only way that you can ensure a greater success for teamwork between the country and the IMF and the World Bank and the donors is to ensure that there is indeed a framework in place where the institutions of the country, including governance, can be addressed.

There is so much talent both in this institution. We now have probably one of the most brilliant thinkers in terms of institutional reform right now in our institution, in the Fund. The Bank, how much work has gone on in developing legal institutions, thoughts about how you can reform the legal structure of countries, how you can reform the judiciary.

If you really want to help the countries, don't waste your energies to ask the kinds of questions that you are asking now, but put your energies into trying to get resources for the kind of judiciary reform to set up institutions that these countries need to help the courthouses. I don't know how much money goes into having these kinds of activities in terms of various groups and talking about what role can these institutions have and how well they can play, but if they can mobilize enough effort to try to get resources for judiciary reform, to setting up courthouses, to getting a good police force going on, all of these are institutions that these countries need. How to ensure that contracts are reinforced, how to ensure that creditors have rights, how to ensure that investors have rights, how to ensure that you can have a stock market that operates efficiently, all of these are questions you have to be addressing. And I am saying all of this because I know that these energies that you are putting in to going back and raking up past records of what the Fund did, what the Bank did, that energy could be used better to push the agendas forward.

We are now more than halfway through to getting to the deadline for the MDGs, and some of these countries aren't going to get there. We have to worry about how to ensure that they get there, and that is where your help and all of the NGOs' help is needed in order to mobilize enough effort to move forward. There will be plenty of time to look backwards, there are plenty of people to look at causes and problems of these countries, but let it happen in the future. Let's push these countries forward as fast as we can so that they can achieve their MDGs.

MS ROMERO: Questions?

QUESTION: My name is Sanjeev Gupta. I am with the IMF Fiscal Affairs Department. I want to clarify the role of the Fund is in the area of PSIAs. There is a four-person unit in the Fiscal Affairs Department, and the purpose of that unit is to actually help integrate the PSIAs done by others into program design and to a very limited extent do PSIA studies. So the discussion here is actually centered on the PSIA unit doing a lot of PSIAs, which is not the primary purpose of the unit. Secondly, on the wage bill ceilings that Jack mentioned, there is a new policy, which the IMF Board approved on July 6 that says that these ceilings will be applied only in certain circumstances. Until the end of June there were only eight programs that had wage ceilings, of which only three had them as program conditionality.

MS ROMERO: Thank you. Any other questions?

QUESTION: Has it happened in IMF history that you gave a prescription to any country not to go quickly with privatization or free trade for fear of backfire because of certain circumstances that this country is going through?

MS ROMERO: To whom are you directing that question? OK. Let's take another.

QUESTION: Since so few people are asking questions, I'll take the liberty again. Since the IMF is focusing so strongly on growth in the lower-income countries, will that lead to relaxation of inflation targets in these countries? Or will the IMF allow or promote a relaxation of inflation targets since anyone who has taken Macroeconomics 101 knows that there is a sacrifice ratio between unemployment and inflation?

MS ROMERO: Thank you. Is there anybody else? If not, we'll wrap up with those two.

MR. LIPSKY: I guess I'll start with the last one. When I took economics, they did think that there was some neat tradeoff between inflation and unemployment. Luckily, we've learned a lot since I was a student, and what we've noticed is that in fact strong and sustained growth is associated with macroeconomic stability, not the other way around. High inflation and high volatility of inflation is detrimental to growth, and not the other way around. We've learned that stability-oriented policies provide the best basis for sustained growth, and not the other way around.

With regard to have we considered doing anything differently, I'm not sure I completely understand the question. In the sense of doing something differently than promoting good economic performance? But I suspect that's not what you meant. I assume that the idea is that reforms should be appropriately paced, but maybe the Dean of the Board can tell us.

Mr. MIRAKHOR: Thank you very much. I don't know how many countries you want me to give you as examples in various areas of the world. For example, in Algeria the speed of adjustment was slowed up quite a bit, and it was basically within the framework of political economy. In Tunisia it was faster again because of the political economy. In Morocco it was slower again because of the political economy background. This idea that there seemed to be a canned program that the Fund gives to all of the countries and all of its members regardless of their background is a myth.

Part of the problem as I suggested earlier is because every time there is an accusation against the IMF, it is made in fora where there is nobody representing the institution and it is always easy to beat up on the guy who isn't there and blame him for everything. I can give you example after example of countries where programs have been tailored to the political economy background of that particular society, in Southeast Asia, in Asia proper, in Africa, in North Africa, everywhere in the world. Even in transition economies there has not been a single prescription. So how many examples should I give you? I can tell you as far as the past 24 years' experience in the IMF that I have, I have not seen two programs alike. The evidence is there, the record is there, for at least since the staff reports have been published, you can go back and look at them. There are available 185 countries and you can compare them. Thank you.

MS ROMERO: Thank you. I think we are going to close. I would like to thank our speakers and reassure them that there will be opportunities for us to criticize them with them being present to defend themselves in the future we hope. Thank you.