Tension has arisen between the IMF and some borrowing countries over how much information the Fund should disclose about their economic policies, a representative of the Group of 24 finance ministers from developing countries said yesterday.
Hector Torres, Argentina's Executive Director at the IMF, said yesterday after the G24 meeting, which was chaired by Gabon's finance minister Paul Tongui, that governments could become wary about what they say to the Fund if they think it will pass into the public domain.
In a communique the ministers emphasized that 'while ensuring that transparency and good governance are enhanced, the IMF needs to maintain its role as a confidential advisor. In this respect, the external communications strategy of the IMF should give due regard to member sovereignty, to avoid the perception of intrusiveness.'
The IMF's role in broadening the policy dialogue and consultation in member countries 'should be discussed and agreed with country authorities,' they added. Torres noted that borrowing countries provide information to the IMF in timely fashion, and assume that such information is 'private'. If they feel that it is likely to pass into the public domain, they might become reluctant to consult with the IMF, he added.
A few hours before the ministers met, IMF Managing Director Rodrigo de Rato had argued at a seminar that the focus of the IMF's attention should be on greater transparency, and that this was essential given its public accountability. The conflict between these two obligations - the need for confidentiality and demand for greater transparency - is giving rise to the 'tension', said Torres.
The G24 ministers challenged the IMF and the World Bank to ensure that 'debt sustainability analyses are based on realistic assumptions.' Often the two institutions make 'excessively optimistic' assumptions about a developing country's ability to sustain debt, complained the G24, and this can deny countries needed debt relief.
The ministers also called for monitoring of trade policies that deny poor countries the opportunity to earn hard currency to finance their debts.
They urged the IMF and World Bank 'to evaluate and widely publicize the impact of trade restrictions and sanctions, and of subsidies to agricultural products, on debt sustainability and on global development in general. Improved access to industrial country markets - particularly through a reduction of tariff and non-tariff barriers and the phasing out of agricultural and other subsidies - will benefit all countries and help promote trade liberalization among developing countries,' they said.