HL Deb 25 June 2004 vol 662 cc158-60WA
The Earl of Sandwich

asked Her Majesty's Government:

How United Kingdom executive directors of the World Bank and International Monetary Fund account or report to Parliament for project or programme funding and grant aid. [HL3260]

Lord McIntosh of Haringey

In practice, decisions by executive directors in both the World Bank and IMF are rarely taken through recourse to formal voting, with the emphasis being placed instead on reaching an informal consensus; and this approach is particularly common for project and programme loans. Nevertheless, in line with the UK Government's wider commitment to transparency in international financial institutions the Government are taking action to make the positions taken by the UK at these meetings more public. HM Treasury already provides broad details of the positions taken in IMF board discussions in its annual report to Parliament on the IMF. However, such information is not currently available for the World Bank, and the Secretary of State for International Development has therefore asked officials to provide a short annual statement to Parliament on UK positions in the World Bank Board, starting with those taken in the bank's financial year 2004 (ending on 30 June 2004).

The Earl of Sandwich

asked Her Majesty's Government:

How far World Bank and International Monetary Fund loans and grants are subject to formal consultation with national parliaments and civil society. [HL3261]

Lord McIntosh of Haringey

The UK has stressed that support to low-income countries must be linked to poverty reduction and we have strongly supported the development of the poverty reduction strategy (PRS) process. Poverty reduction strategies have become central to the international development agenda, setting out a clear, country-led strategy upon which donor support can be built. They set key policy priorities for low-income countries in the medium term, and make linkages to budgets and spending. This ensures that government revenue, aid, and debt relief from the heavily indebted poor countries (HIPC) initiative are directed towards poverty reduction. The PRS approach has involved substantial changes in World Bank and IMF operations, with their programmes being framed by, and providing support to, these nationally led development plans.

The basic principle of the PRS approach is national ownership, as a government will only implement policies that they believe in. The PRS therefore has to be written in country, by its government, with the full involvement of civil society, the private sector and the international community. Taken together, this should ensure that these strategies have the widest possible support in country. This participatory nature of a PRS is one of the requirements for it to be approved by the boards of the World Bank and the International Monetary Fund as a basis for their lending. Some governments have included participation of national parliaments as well as civil society in their PRS process. In cases such as Tanzania where the PRS has ensured a significant role for Parliament, the part it has played is considered an important investment in the country's democratic process. There can however be a tension between the sovereign right of a government to set the policy agenda in line with the constitutional procedures in place in that country, and external parties insisting on participatory policy processes.

While we have no doubt that the PRS approach is a major step forward in the relationship between the international financial institutions and low-income countries, we recognise that the process is still at a relatively early stage of implementation and may require further improvements in its design and application. We therefore look forward to the results due later this year of the reviews of the PRS process by the IMF's Independent Evaluation Office and the World Bank's Operations Evaluations Department. The UK will play a full part in discussions on these issues and will continue to monitor the practice of the IMF and World Bank to ensure their guidelines are effective and also adhered to in practice. The UK Government are committed to maximising country ownership of PRSs and ensuring that World Bank and IMF programmes are fully aligned behind them.