The International Financing Facility promoted by the UK and France is being pushed through ?by stealth? to thwart strong opposition to the idea from leading nations to the idea of ?front loading? future foreign aid commitments. World Bank President James Wolfensohn gave a clue to the strategy at the closing press conference of the annual meetings when he said that the fate of the IFF could ?become clearer within a matter of weeks.?
Japanese Finance Minister Sadakazu Tanigaki indicated earlier his government's opposition to the principle of front loading aid by saying that ?we are afraid that delving into this matter and having further discussions might not reach productive outcomes.? Asked to comment, Wolfensohn replied cryptically that the upcoming meeting on the GAVI project would provide an indication of ?how many people wish to join? the IFF initiative.
Sources close to the project ? the Global Alliance on Vaccination and Immunisation ? told Emerging Markets that this will serve as a pilot for the more ambitious IFF scheme. The UK and France are hoping that, under GAVI, donors will agree to pre-commit up to $8 billion of future aid to finance vaccination programmes for children in developing countries. If this approach works, the principle will have been established.
Supporters of the plan hope that opponents of the IFF ? principally the US and Japan ? would see this as a vindication of UK Chancellor Gordon Brown's more ambitious plan to secure $50 billion in aid pre-commitments so this can be used to secure bond financing from international financial markets. The money would then be used to fund aid objectives agreed at the UN meeting in Monterrey in 2001 known as the Millennium Development Goals. The IFF, which secured the support of the joint World Bank and IMF Development Committee and also of the G24 group of developing nations on Sunday, was a significant element in an annual meeting which delegates have seen as particularly unfocused this year. A plethora of other issues, ranging from poor country debt relief and sustainability to the voice of poorer nations in the Bretton Woods' institutions, surfaced but few decisions were taken.
Wolfensohn agreed that discussion on giving greater voice and representation in the World Bank to emerging economies had so far proved inconclusive. ?Debate has been engaged and I hope that [the issue] will be resolved before long,? he commented. IMF Managing Director Rodrigo Rato added that ?at the end, it will be a political decision.? But he agreed that ?this is an important decision that affects the legitimacy of the [IMF and World Bank]. Increasing aid flows will also be a political decision to be taken ?country by country,? he added.
The other achievement of the meetings was to elevate the importance of infrastructure in development financing. In his closing remarks to governors, Wolfensohn said that ministers had reminded him that ?the need for infrastructure is enormous?. The World Bank and the IMF ?are looking to see whether they can come up with country-specific solutions,? he added.