SPRING 2018 obsBRETTONe WOODSrver A quarterly critical review of developments at the World Bank and IMF

ENVIRONMENT analysis In this issue

As World Bank signals end of extraction finance, 2 AIMM: Will IFC hit rights-based CSOs call for end to its other fossil fuel funding development target? 3 Tunisians take to the streets over IMF- imposed austerity by Clara Capelli

5 The wrongdoings of the Doing Business Rankings and the corporate take-over of agriculture by Frederic Mousseau

7 The impacts of IMF- backed austerity on women’s rights in Brazil by Grazielle David

Alex Doukas from US-based NGO Oil Change for the Bank’s direct lending to low-income WBG announced it will end finance for International (OCI) hailed the importance International Development Association (IDA) ‘upstream’ oil and gas projects after 2019 of the upstream pledge in a December countries, which allows the Bank to fund Pledge includes exception for gas projects blog, noting “each dollar of World Bank upstream gas projects if they are judged to in low-income countries finance currently going into oil and gas have an energy access component and be catalyzes many more, and … many projects part of a low-carbon transition strategy. This Commitment does not apply to FI and DPL that get World Bank finance would never raises questions about how stringently this lending go ahead without it. So, the finance that exception will be interpreted when it comes will shift away from oil and gas as a result into force in 2020. Moreover, upstream of this announcement really matters, and lending is only about one-third of the Bank’s The end of 2017 brought a boost for climate will have an even larger effect than the fossil fuels portfolio, according to the OCI advocates, with World Bank Group (WBG) numbers might suggest.” OCI’s Shift the database. Finance for pipeline projects that President Jim Yong Kim announcing at Subsidies database showed that the Bank’s bring upstream oil and gas to markets is December’s One Planet Summit in Paris upstream portfolio is significant, amounting not covered by the pledge, for example (see that the Bank will cease project lending to “an average of over $1 billion per year in Observer Autumn 2017). for ‘upstream’ oil and gas projects after exploration and production activity between 2019. As the Bank clarified, “upstream is an 2014 and 2016.” The upstream pledge Bank’s indirect fossil finance continues industry term that refers to exploration of oil marked an important victory for civil society The upstream pledge also only applies to the and natural gas fields, as well as drilling and organisations (CSOs) who have engaged in Bank’s project lending and does not extend operating wells to produce oil and natural a decades-long push for the Bank to end its to other parts of the Bank’s portfolio, such gas.” The Bank also announced at the support for fossil fuels. as lending to financial intermediaries (FIs) summit that it “will be applying a shadow and development policy loans (DPLs). This is price on carbon in the economic analysis of Despite the upstream pledge being a major significant, as the WBG is de facto funding all … projects in key high-emitting sectors.” step in the right direction, many challenges a new generation of coal power plants and This followed the Bank’s October 2017 remain for the Bank to fully decarbonise its other fossil fuel projects via support for FIs, commitment to begin tracking the carbon lending portfolio. Firstly, the pledge will not as documented by CSOs in Bangladesh, emissions of its project investments for the end the Bank’s fossil fuel project lending. India, and the Philippines (see Observer first time in 2018. The upstream pledge included an exception

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Winter 2017-2018). To close loopholes portfolio in terms of support for fossil fuel This agenda … is largely reliant on fossil that allow funding of fossil fuels via the projects between FY14-FY16 among the fuels, mining and large-scale agribusiness. back door, CSOs have advocated that the four members of the WBG. E3G found that … [It] is fundamentally incoherent with the Bank publicly disclose and track its indirect in FY16, MIGA did not support a single fight against climate change.” Although financing, and include an exclusion list on renewable energy project: “[its] guarantees the World Bank is currently assisting fossil fuel projects in its indirect lending to energy were worth $1.9 billion in 2016, countries with their Nationally Determined portfolio. CSOs have also argued that the of which $0.9 billion went to fossil fuel Contributions (NDCs) to the Paris Agreement, Bank is ‘propping up’ fossil fuels through its projects”, with the rest going to projects these only involve planning through 2030; DPLs, which provide fungible direct budget such as hydro-dams, which often have given the decades-long lifespan of proposed support to national governments. A January significant environmental and social mega-infrastructure projects, governance 2017 report from Netherlands-based CSO impacts. Given that such guarantees offer approaches in line with Paris’s 2050 time Bank Information Center Europe highlighted financial ‘de-risking’ and provide political horizon are needed to ensure Bank- that in Peru, Indonesia, Egypt and legitimacy to projects, CSOs have stressed it supported infrastructure projects do not Mozambique, DPLs have created incentives is problematic for MIGA’s portfolio to lean so become ‘stranded assets’ that will need to for coal, oil and gas investments, as part of heavily towards fossil fuels. be retired to meet global climate goals (see the ‘prior actions’ (i.e. regulatory changes) the Bretton Woods Project’s 2014 briefing, required for countries to secure these loans Climate concerns over infrastructure Multilateral Development Banks’ unburnable (see Observer Spring 2017). CSOs argue the A December report published by Belgian- carbon). Bank needs to adopt a safeguard for DPLs based CSO Counter Balance highlighted Despite the substantial challenges that that, inter alia, prohibits prior actions that the contradictions between the WBG’s remain, CSOs are cautiously hopeful that the promote fossil fuels. push for a new generation of ‘mega- upstream pledge can serve as a catalyst for infrastructure’ (see Observer Winter 2017) The World Bank’s ‘dirty’ guarantees transforming the Bank’s wider approach to and effective climate action. The report energy and climate investments. Research by UK-based CSO E3G showed noted, “The building of planned mega that the Bank’s Multilateral Investment corridors would … mean locking-in the Δtinyurl.com/WBGfossils Guarantee Agency (MIGA) had the dirtiest current extractivist development model.

RIGHTS news

AIMM: Will IFC hit rights-based development target?

AIMM an important opportunity for the IFC Given the importance of AIMM in informing CSOs call on IFC to incorporate human to address many issues raised by them and the IFC’s investment decisions, civil society rights-based methodology in AIMM the IFC’s Compliance Advisor Ombudsman offered to assist the IFC to integrate a CSOs wait to see whether AIMM will apply (CAO, the IFC’s independent accountability human rights-based approach into AIMM to FI lending mechanism), including documented cases that goes beyond narrow projections of job where IFC investments have supported land creation and investment inflows. This would grabs, displacement, loss of livelihoods and ensure that IFC investments are used to At the October 2017 World Bank and IMF destruction of the natural environment (see attract hesitant private sector investments Annual Meetings in Washington DC, the Observer Summer 2017, Winter 2017-2018). to activities that bring tangible benefits to International Finance Corporation (IFC, the CSOs are waiting to see whether AIMM communities’ ability to avail themselves of World Bank’s private sector arm), introduced will apply to all aspects of IFC’s portfolio, their economic, social and cultural rights. its new development impact measurement including its investments in financial This would in turn assure IFC investments are framework, Anticipated Impact Measurement intermediaries. As a January report by fully in line with the Sustainable Development and Monitoring (AIMM, see Observer Winter US-based Center for Global Development Goals, which resolve to “protect human 2017-2018). The new system will replace (CGD) on the nature and destination of rights.” its Development Outcomes Tracking System IFC investments noted, “IFC’s portfolio (DOTS) and is to be fully operational by is not focused where it could make the AIMM is given additional importance by the 2019. Contrary to DOTS, where development most difference”, given that most of its Bank and IFC’s new focus on fragile states impact was only assessed three years after investments were in upper-middle income and the new International Development project implementation, AIMM will conduct countries. While the IFC responded that it is Association’s (IDA) – the World Bank’s low- an ex-ante assessment of likely development the largest investor in low-income countries income arm – (see Inside the Institutions outcomes of proposed investments. It will among international financial institutions, Spring 2017) private sector window also try to determine portfolio-wide impacts, CGD noted that its analysis was difficult (see Observer Winter 2017). Given the with a focus on how individual investments due to the lack of publicly available and challenges of operating effectively in fragile and the portfolio generally perform in user-friendly data provided by the IFC. This environments, civil society has suggested creating markets, a key objective of IFC’s new echoes a persistent complaint of affected that the IFC strongly consider developing 3.0 strategy (see Observer Spring 2017). communities and their CSO partners with AIMM tools specific to those settings. respect to IFC investments. Civil society organisations (CSOs) consider Δtinyurl.com/IFC-AIMM-HR

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CONDITIONALITY analysis

Tunisians take to the streets over IMF-imposed austerity by Clara Capelli, PhD. Research fellow at Cooperation Development Network

Given the lack of progress on reforms driven growth is uncertain, redistributive IMF pushed export-led growth will create related to public employment and other repercussions are the expected short- and low wage, low value-added economy loan conditionality, in December 2016 the medium-term consequences of the IMF’s IMF postponed the disbursement of the approach. Theoretical assumptions informing IMF’s agenda must be reconsidered second EFF instalment, which was eventually approved in May 2017. The Tunisian This policy response reveals the IMF’s poor government and Central Bank have complied understanding of the Tunisian economy and inability to design alternatives to neoclassical In January 2018, the introduction of austerity with the IMF’s request for more flexibility of development policies, which prioritise supply- by the Tunisian government sparked the exchange rate regime. Consequently, led fiscal stability over decent employment widespread discontent. Already strained by the Tunisian dinar has undergone a dramatic and social justice. First, a small economy the difficult economic conditions and the fall since 2011, losing approximately 20 per hugely dependent on its economic relations further shrinkage of their purchasing power cent of its value against the euro in 2017. The with the European Union can hardly benefit between 2016 and 2017, Tunisians took to depreciation came along with a significant from currency depreciation if not supported the streets, protesting the 2018 Finance Law increase in the inflation rate during 2017, by measures that promote structural and the IMF’s loan conditionality, which aims which hit 6.4 per cent by the end of the year. transformation and shield consumers from to cut the budget deficit to 4.9 per cent of The IMF’s call for a flexible exchange rate high inflation rates. Second, business and GDP. The deficit is supposed to be decreased is based on its presumption that a weaker investor confidence is built upon a variety through increases in indirect taxation (e.g. currency will be a catalyst for exports. of factors, and does not necessarily lead VAT rates, and purchase taxes on several Yet, the IMF’s faith in the benefits of this to sustained job creation and fairness. consumer goods, including fuel and electricity) approach completely overlooks the structure Third, development does not mean social and reductions on the fiscal burden on of Tunisia’s export sector as well as the dire and economic engineering: the expression enterprises as well as public and private consequences that currency depreciation has “well-designed, well-implemented, socially- employees. on import-dependent economies. In Tunisia, balanced reforms” means that austerity A January 2018 article published by UK the export sector is primarily based on low- measures are to be justified in the name of a newspaper The Guardian severely criticised wage labour, mainly consisting of low-value mechanical view of economic policy. the IMF’s austerity agenda in Tunisia, raising added manufacturing, low-cost tourism and A radical reconsideration of the IMF agenda’s concerns about the impact of these policies cheap services, such as call centres owned theoretical assumptions – in Tunisia as well on vulnerable citizens. The IMF responded to by foreign companies. A significant boost in as elsewhere in the region – is more than ever the article on its website noting that instead of Tunisian exports is yet to be seen, but even necessary to shape macroeconomic policies austerity, it advocates, “well-designed, well- if they materialise, doubts remain about the that effectively promote productivity growth implemented, socially-balanced reforms”, number and quality of jobs they may create. and decent employment. defending the theoretical foundations of its In reality, Tunisia relies strongly on imports neoclassical, supply-side agenda. The Fund for consumption and hardly benefits from Δtinyurl.com/TunisiaIMF argues that growth will come with improved domestic substitutes. While sustained export- business and investor confidence, which in turn will come once Tunisia can cut its deficits and control debt and inflation.

Multilateral and bilateral donors have considerably increased their presence in Jaffe Photo: Stephen Tunisia, as well as their financial support to the political transition process and development of a ‘success story’ following the 2011 uprisings. The IMF is a major actor through its four-year $2.9 billion Extended Fund Facility (EFF) agreed in May 2016. Since the beginning, negotiations on the EFF between the Tunisian government and the IMF have been complicated and delayed by the unpopularity of the IMF’s austerity-inducing conditions. One thorny issue regards public employment and public- sector wage freezes, strongly opposed by the Tunisian General Labour Union (UGTT). IMF Managing Director Christine Lagarde is greeted by Chedly Ayari at the Central Bank Tunisia September 9, 2015 in , Tunisia. 3 BRETTON WOODS OBSERVER SPRING 2018

SERVICES news RIGHTS news

CSOs urge IFC to divest from for-profit school CSOs continue to push chain for review of Bank’s ESF Kenya, BIA failed “to comply with its Ministry guidance notes CSOs call on IFC to divest from Bridge of Education’s requests to register schools”, Following the release in November 2017 of International Academies used an unapproved curriculum, and failed the World Bank’s Draft Guidance Notes for to meet teacher certification standards. Borrowers (GNs, see Observer Winter 2017- IFC remains investor, despite WDR’s This led to a court-ordered closure of Bridge 2018) that will support the implementation of concerns about private education schools and numerous other court cases. In its much-criticised Environmental and Social Uganda, following 18 months of dialogue Framework (ESF), civil society organisations In an open letter in early March, 88 civil with BIA, the government confirmed in (CSOs) expressed concerns about the content society organisations (CSOs), including the February that BIA, “will not be permitted of the GNs and the consultation process Initiative for Social and Economic Rights to open/operate this school year (2018)” generally. In a December 2017 letter to the (ISER) in Uganda and the East Africa Centre after it failed to comply with requests from Bank, 29 CSOs called for the draft GNs to for Human Rights in Kenya, urged the the Ugandan Ministry of Education to meet be “substantially revised” in light of their International Financial Corporation (IFC, legal and educational standards. Salima “redundancy, lack of clarity, and lack of the World Bank’s private sector arm) and Namusobya, of ISER in Uganda commented, substantive content” and for the Bank to hold other investors, to cease support for the “Bridge has failed to meet basic standards a second comment period. and deliver on their promises, and the multinational low-fee for-profit education The Bank has compiled CSO and other provider Bridge International Academies Government is currently closing illegal schools. Yet, the company is still supported input into the draft GNs, which it stated will (BIA). BIA runs over 500 schools in Kenya, be aggregated into a detailed ‘response Liberia, Nigeria, Uganda, and India. The by investors abroad that would never accept such a situation in their own country. matrix’ explaining how and why comments letter follows an August 2017 open call by were or were not incorporated into the 174 CSOs for investors to cease support Investors will be complicit in this disaster if they do not remove their support.” revised GNs. The matrix will be made public for BIA (see Observer Autumn 2017). The within three months of the closure of the press release documented concerns raised IFC defends BIA’s performance comment period on 22 December 2017. by numerous independent sources, such as The Bank maintains that, as the GNs are The IFC responded on 19 March supporting the UN, including, “higher costs than those living documents that don’t require Board its investment in BIA, citing, “The strong advertised by the company, failure to register approval, no additional consultation is performance of Bridge pupils…, as well as schools, use of unapproved curriculum, needed. Civil society considers the GNs learning gains in Liberia.” Referencing the failure to meet teacher certification a flawed tool that provides little help to same independent evaluation by the Center requirements, and discriminatory impacts.” borrowers on the implemention of the ESF. BIA replied with a public statement claiming, for Global Development of Liberia’s public- “most of the reports and evidence collated private partnership school programme on Δtinyurl.com/ESF-GNs-concerns-remain for this letter (of March 1st 2018) have been which IFC’s assertions above were based, previously rebutted.” the CSO letter stressed the evaluation’s finding that “BIA spent more than 13 times Miriam Brett joins In late March CSOs responded to BIA’s reply, the Government spending per student and calling on investors to review the evidence turned away children from schools to reduce BWP as International presented in the original letter and “to pupil-teacher ratios, to reach artificially Development Finance cease funding any company whose actions improved learning outcomes, though still Project Manager seriously damage the right to education only reaching low outcomes in absolute” and undermine domestic and international (see Observer Autumn 2017). We are pleased to welcome Miriam Brett human rights law.” as the Bretton Woods Project’s (BWP) new While the IFC’s letter referenced the 2018 International Development Finance Project The first March CSO letter criticised BIA’s World Development Report (WDR), it did Manager. Miriam will lead the team’s “complicity in the arrest and detention not acknowledge the WDR’s finding that, work on developments in international without evidence of an independent “there is no consistent evidence that private development finance, with a focus on the researcher” in Uganda, and BIA’s use of, schools deliver better learning outcomes negative impacts of IMF policies. Miriam “Legal action against the Kenya National than public schools.” The WDR also observed previously worked as Senior Economic Union of Teachers (KNUT) resulting in a gag that in developing countries, “governments Advisor to the Scottish National Party in order preventing the union from publicly may deem it more straightforward to Westminster and, prior to this, worked as mentioning BIA while awaiting trial.” BIA’s provide quality education than to regulate a researcher for the Scotland-based think case against KNUT was dismissed on 20 a disparate collection of providers that may tank Common Weal. She holds a first- February. The letter further highlighted not have the same objectives.” In light of class BA (hons) in International Relations controversies in Uganda and Kenya where these findings and the continuing concerns from the University of Stirling, specialising it stressed that BIA has been operating over BIA’s performance, it is striking that the in social justice critiques of international schools illegally and failing to adhere to IFC continues to invest in low-fee for-profit financial institutions. national education standards (see Observer schools. Summer 2016), even after authorities Ω[email protected] ordered the closure of Bridge schools. In Δtinyurl.com/IFC-divest-from-BIA

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LAND analysis

The wrongdoings of the Doing Business For this to happen, one must reject the Bank’s focus on foreign investment, large- Rankings and the corporate take-over of scale agriculture, commercial inputs to agriculture increase yields and cash crops for export. As evidenced in the Oakland Institute’s series of by Frederic Mousseau, Oakland Institute agroecology case studies, agricultural yields, farmers’ income and food security can be drastically increased with practices and EBA: The expansion of a failed model policies that encourage crop diversification, Civil society urges World Bank to scrap Based on the DBR’s model, the Enabling require less external inputs, enhance soil DBR and EBA the Business of Agriculture (EBA) report fertility and increase biodiversity. So far, EBA harms small-scale farmers by putting was launched after leaders of the G8 asked the Bank has turned a deaf ear to the corporate interests first the World Bank in 2012 to create a “Doing concerns raised by civil society and to the Business in Agriculture Index”, to guide recommendations of its own Independent policy makers in the developing world in Evaluation Group. Under the campaign ‘Our Land Our designing “business-friendly” agricultural As a result of Romer’s high-profile criticism, Business’, NGOs, trade unions, farmers’ policies and regulations. It was started Chile has demanded a full investigation organisations, consumer and environmental with financing from the US, UK, Danish, and into the DBR. The Dutch and Danish groups – all together over 280 organisations Dutch governments as well as the Bill and governments, two of the five initial EBA from over 80 countries – demanded that the Melinda Gates Foundation. donors targeted by the Our Land Our World Bank stop one of its most insidious Business campaign, have pulled their activities: the ‘business ranking’ of countries. The EBA dictates so-called “good practices” financing from the project. Early in 2018, The Bank’s Doing Business Report (DBR) has to regulate agriculture and scores countries France decided to pull out of the G8 New scored countries according to how well their on how well they apply and implement Alliance for Food Security and Nutrition, an governments are “improving the business them. Based on the EBA scores, the World initiative which the EBA was established climate” over the past 15 years. But this Bank leverages policy changes in agriculture. to support and complement. In the wake model suffers from fundamental flaws (see By promoting a so-called “commercially- of growing civil society mobilisation, some Observer Summer 2017). oriented” agricultural transformation, the Bank portrays farmers forced out of governments have been forced to take In January 2018, the Bank’s Chief Economist agriculture through land transfers as an action, leaving the US, the UK, and the Paul Romer publicly denounced the flawed “opportunity” to take up non-agricultural Gates Foundation increasingly isolated in methodology of and political manipulation employment and obtain better livelihoods. their mission to promote corporate interests by the World Bank’s DBR, which Romer As exposed by a recent Oakland Institute through the EBA. It will be in the Bank’s noted may have been used to disfavour report, the EBA’s goal is to promote favour to follow the stated mission of its Chile’s ranking under its outgoing socialist measures and reforms that will favour the development agenda – to end poverty, president, Michelle Bachelet. Romer’s corporatisation of agriculture, including instead of misusing it to harm the poor. resignation followed a few days later. increased industrial agriculture and the Ω[email protected] privatisation of seeds around the world. In 2013, the World Bank’s own Independent Δourlandourbusiness.org Δoaklandinstitute.org Evaluation Group (IEG) recommended that Handing over natural resources like land Δtinyurl.com/WBEBADBR the country rankings be eliminated from to corporations and destroying small- the DBR (see Observer Autumn 2013). scale agriculture will not reduce poverty. The group’s report also criticised the DBR The Oakland Institute’s extensive series for ignoring “the social or economy wide of reports on large-scale agricultural benefits that regulations yield, such as investments in Africa showed that wealth safety, environmental protection, worker redistribution from agricultural investments protection, or transparency.” By forcing has not been equitable. Job creation and countries to compete against each other, labour conditions on large farm holdings the rankings encourage a race to the bottom fail to match the revenue, quality of life, of deregulation between countries. The and employment levels generated by small IEG also recommended eliminating the farms; and rural migration towards over- tax indicator, which penalises countries populated, unemployment-stricken cities that require private companies to pay does not improve livelihoods. taxes or make contributions to pensions Bank World Balabanov, Boris Rumenov Photo: Sunflowers, and other social protection schemes (see Though investments in agriculture are Observer Winter 2017). Bank management clearly needed in the developing world, ignored these recommendations and these should benefit the farmers, the local has maintained a scoring system that and national economies, and ultimately rewards governments that not only cut contribute to global food security. This taxes but also eliminate social, labour and requires locally adapted solutions based on environmental regulations in favour of the experience, needs and the demands of corporations and foreign investment. farmers, pastoralists, and rural communities.

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ACCOUNTABILITY analysis

IEG critical of World Bank’s progress on shared prosperity goal

cent of staff, “believe that in implementing or taxation policies as a channel for IEG report casts doubt on Bank’s progress the shared prosperity goal, the WBG should contributing to the shared prosperity on its own shared prosperity goal focus more explicitly on reducing inequality” goal”, it does not go on to mention ways and that, “These views are shared by several to improve this in its recommendations. It Civil society raises concerns about Bank’s World Bank chief economists.” Tellingly, in thus seems to ignore compelling evidence, approach to shared prosperity a discussion on the IEG report at the Bank, such as that provided by the Tax Justice Manuela V. Ferro, the Bank’s Vice President Network August 2017 blog, of the positive In 2013, the World Bank Group (WBG) of Operations Policy and Country Service in impact progressive tax policies can have committed itself to twin goals: To end March, referred to shared prosperity as the on decreasing inequality. Concerningly, extreme poverty by 2030, and to achieve Bank’s “sometimes forgotten goal.” The IEG the IEG report does not once mention shared prosperity, defined as, “fostering findings indicate that the Bank’s approach trade unions, despite being published only income growth of the bottom 40% of the to shared prosperity suffers from a lack of months after the International Trade Union population of every country.” Last November, clarity, prioritisation and ambition. Confederation (ITUC) and Global Unions called on international financial institutions the Bank’s Independent Evaluation Group A definitional debate (IEG) published an evaluation entitled – including the Bank – to boost incomes Growth for the Bottom 40% which found a The IEG findings and recommendations of people around the world by supporting series of problems with the Bank’s progress suffer from its narrow approach. The Bank’s strengthened collective bargaining rights. on this goal. Some of these, such as the limited definition of shared prosperity as ITUC General Secretary Sharan Burrow said, scarcity of timely and good-quality data, income growth of the poorest overlooks “A rise of wages will do much to … stop the are unsurprising. Others, however, hint at the pernicious impacts of wealth inequality. trend of increasing inequality and provide problems with the Bank’s approach to shared Economists such as Thomas Piketty have the increase in global demand needed to prosperity more generally. warned that if the richest accumulate sustain economic recovery.” wealth at a faster pace than economies The Bank’s PPPs agenda – further One of the central findings was that the are able to grow, inequality in that society incoherence with ‘shared prosperity’ Bank’s Country Partnership Frameworks, will intensify. A January 2018 Oxfam report “generally do not fully articulate the theory entitled Reward Work, Not Wealth found While the report clearly stipulated that, of change pertaining to the bottom 40 that 82 per cent of the wealth generated “supporting equitable and sustainable percent.” The evaluation also found that, last year went to the richest 1 per cent, macroeconomic policies” should inform “only 32 percent [of World Bank projects] while the poorest 3.7 billion people saw no much of the shared prosperity work, it have an explicit theory of change linking increase in their wealth. As outlinted below, does not address the implications of the project interventions to benefits among the the Bank’s definition of the shared prosperity Bank’s Maximising Finance for Development bottom 40 percent.” Another striking finding parameters, coupled with IEG’s findings, (MFD) approach and its related push for of the report is that only 63 per cent of Bank has obvious implications for the policy public-private partnerships (PPPs) on staff, “are fully familiar with the official prescriptions and strategies used by the macroeconomic sustainability or equality World Bank definition of shared prosperity.” Bank to pursue its second goal. (see Observer Summer 2017). Civil society Knowledge of the shared prosperity goal is expressed its concern in the October 2017 at its lowest within the Bank’s private sector Guilt by omission – tax and labour rights ‘PPP Manifesto’ signed by 152 CSOs, which arm, the International Finance Corporation While the IEG evaluation stated that only stressed that the available evidence on PPPs (IFC), at just 42 per cent. about 6 per cent of staff “mention work indicates that they threaten macroeconomic stability through hidden debts and contingent In addition, the evaluation found that 68 per focused on improving macro stability liabilities, and increase inequality through user fees for the most vulnerable (see Observer Winter 2017-2018). For example, as noted in -based CSO Counter Balance’s December 2017 How infrastructure is shaping our world report, the Bank’s MFD and PPP agenda both support the development of mega-infrastructure corridors that enhance rather than alleviate inequality.

Δtinyurl.com/IEGprosperity

For longer versions of Observer articles with additional links, see brettonwoodsproject.org/observer

Para la versión en español, visite: brettonwoodsproject.org/es/observador

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SOCIAL SERVICES analysis

The impacts of IMF-backed austerity on to states and municipalities are not included in the cap and that this money would finance women’s rights in Brazil these two essential public services.

by Grazielle David, Institute of Socioeconomic Studies (INESC) In reality, according to article 110 of CA 95, the federal transfers to the states and municipalities earmarked for health and education fall under the expenditure cap. the passage of CA 95, these expenditure Therefore, the cap shifts the burden of IMF and World Bank endorse Brazil’s 20- levels are expected to remain constant these social costs further to states and year spending cap for the next 20 years. As demonstrated by municipalities. Constitutional un-earmarked INESC research, expenditures specifically federal transfers are a very important source CSOs argue cap violates human rights principles and is ineffective benefitting women were reduced by 58 per of income for states and municipalities, cent after CA 95 came into place, while the as these transfers can be used to finance number of specialised services offered to anything. Given that many municipalities Since 2015 the Brazilian government has women suffering from violence was also and states are already facing fiscal crises, implemented unnecessary and excessive reduced by 15 per cent between 2014 and it is unrealistic to expect that they would austerity measures with major human 2016, and are now frozen at this level. CA 95 direct this revenue to education and health. rights implications, especially for women’s not only violates the human rights principles Given multiple pressing priorities, it is rights, despite the availability of less of non-retrogression and non-discrimination, expected the cap will result in a significant harmful alternatives. Among these austerity but endangers the lives of Brazilian women. reduction of support to women, despite the measures, the unprecedented constitutional IMF’s claims to the contrary. Simultaneously, the Brazilian government amendment – CA 95, which came into has been dismantling state institutions that Right diagnosis, wrong remedy effect in December 2016 – capped social promote gender equality. The Secretariat for expenditures and investments at 2016 The IMF did affirm that the fiscal deficit in Women’s Policies had its status diminished in levels, adjusted to inflation, for the next Brazil was not a result of excessive social 2015, no new shelters for women have been 20 years. It has been endorsed by the IMF expenditures, but rather a crisis of the built in 2017, and no public campaigns to and World Bank, while Brazilian civil society private sector. On this, we agree. However, prevent violence against women have been seeks its revocation. The IMF’s support for what is the logic of identifying a private executed since 2014 due to budget cuts. the amendment was made public in its sector crisis and then recommending November 2016 technical assistance report. IMF claims social spending is protected an austerity measure of freezing public It reinforced this view during the visit of IMF social expenditures for 20 years? This officials to Brazil one month before the vote When presented with this evidence during flawed macroeconomic policy decision on the amendment took place, in the midst a panel session on the gendered impacts of disproportionately impacts the most of nation-wide protests against its approval. IMF policies during the 2017 IMF and World vulnerable and women in particular, and Bank Annual Meetings in October, an IMF ignores the fact that there are alternative Gendered impacts of CA 95 official said that the expenditure cap would fiscal policies with beneficial gendered exempt much of Brazil’s health and education From 2015 to 2017, social investments were impacts. spending (see BWP briefing, The IMF, Gender reduced by an estimated $42 billion, or 6 Equality and Austerity). She argued that the For example, in Brazil research demonstrates per cent of Brazil’s total expenditures. With constitutionally guaranteed federal transfers that women tend to pay more taxes relative to their income than men, given the very regressive tax system that overburdens the poorest. This is particularly the case for black women, who make up the poorest demographic group in Brazil. If instead of cuts to the social budget, the government had carried out progressive tax reforms,

Photo: Agencia Brasil Tânia Rêgo Tânia Photo: Agencia Brasil like shifting tax burdens from consumption to income and wealth taxes, the result could have been significantly fairer. Such a solution could have reduced the high levels of inequality in Brazil, currently among the highest in the world, and helped correct gender biases in the tax code, as well as increased overall revenue collection. This could have eased the need for fiscal consolidation and would have relieved the disproportionate burden on women in particular.

Δtinyurl.com/IMFTunisia Brazilian protests against austerity

7 ACCOUNTABILITY news

#MeToo arrives at World Bank as it publishes criticising the Bank’s lack of action to address internal sexual harassment since Gender-Based Violence Action Plan the 1992 Stern and 1999 US Congressional reports, which concluded that the “Bank’s process of commissioning an external internal justice system that is supposed to Action Plan calls for additional resources review of its internal processes and protect women from sexual harassment to tackle GBV procedures, with particular attention to [is] unfit to adjudicate sexual harassment sexual harassment and exploitation inside Bank to conduct external review of its claims.” Williams argued little has changed the Bank, including a review of the Code of sexual harassment procedures since the Stern Report identified “a rampant Conduct in which the Bank’s commitment culture of ‘general sexual harassment.’” Internal sexual harassment cases from to protect staff is included. Anne Quesney of While the Bank develops processes to 80s brought to World Bank Ombudsman ActionAid UK noted that, “while developing prevent GBV in its operations, it evidently the AP, cases of abuse of power and sexual has a long way to go in addressing this issue harassment of staff surfaced within the holistically throughout the institution. In November 2017, the World Bank released Bank itself – demonstrating that the problem an Action Plan (AP) outlining measures goes well beyond contractors’ behaviour and Δtinyurl.com/GBVmetoo and a timeline for implementation to help illustrating the endemic nature of violence prevent and respond to gender-based against women and girls across society, violence (GBV), including incidences of providing the Bank with an opportunity to Follow BWP’s World sexual exploitation and abuse (SEA) in World adopt a holistic approach to addressing Bank and IMF 2018 Bank-financed projects. The Bank’s press unequal power structures.” release noted the AP addressed the Global Spring Meetings GBV Task Force (TF) recommendations, Sexual harassment at the World Bank – Dispatch which resulted from sexual exploitation not a thing of the past World Bank and IMF governors will and abuse allegations in a Bank-financed In December 2017, Elaine Zuckerman, of meet during the 2018 Spring Meetings Uganda road project (see Observer Spring US-based NGO Gender Action and a former in Washington DC from 20-22 April. The 2017, Autumn 2017). In the aftermath of Bank staffer, wrote a letter to the World Civil Society Policy Forum (CSPF) will the Uganda case, the global development Bank Ombudsman where she spoke out take place from 17-20 April. The Bretton media platform Devex reported in April 2017 about her own experiences of being sexually Woods Project will provide analysis of that Bank President Jim Yong Kim called GBV assaulted by two male Bank officials in the meetings’ communiqués, notes a “worldwide epidemic” that “undermines the early 1980s. Her letter recounted that, from CSPF seminars and more on BWP’s all our work”, and vowed to make preventing at the time, she sought “redress from the Dispatch page. GBV a priority during his second term as World Bank Ombudsman”, but was told that head of the institution. Key themes to be discussed include “he could do nothing without witnesses” increased engagement with fragile Reflecting the TF’s recommendations, the – effectively ending the complaint states, climate change, the IMF’s social AP included a section “mandating Codes process. “Without any transparency and protection work, implementation of of Conduct for civil works contractors in accountability, the perpetrators, and other the Bank’s Maximising Finance for Bank Standard Procurement Documents, lechers in the Bank … were protected by Development approach, the 10-year with prohibitions against SEA/GBV”, silence.” Zuckerman wants to “retroactively anniversary of the global financial including against sexual activity with seek and explore obtaining justice”, and crisis, bridging the global infrastructure under 18-year olds, regardless of the local share her experiences “to improve the gap and the capital increase for the legal age of consent. Following the TF’s Bank’s work culture”, stressing, that “Now is International Bank for Reconstruction recommendations, the AP ensures that the ideal moment to examine, spotlight and and Development (IBRD, the Bank’s additional resources are made available and redress past and present sexual violations middle-income arm), the International establishes a two-year GBV Prevention and in the Bank so that all staff have the safe Finance Corporation (IFC, the Bank’s Mitigation Fund. The TF’s recommendations workplace they deserve!” private sector arm), and Multilateral and the AP only look at Bank projects and Zuckerman’s letter was followed in Investment Guarantee Agency (MIGA, the are not aimed at internal Bank procedures February by an article in Washington DC- World Bank’s political risk insurance arm). for sexual harassment and abuse. based newspaper Afro by E. Williams, of Δtinyurl.com/Spring18Dispatch Separate from the AP, the Bank is in the the National Congress of Black Women,

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