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The G-24 and the IMF; foxes vie for control of the henhouse


The Group of 24 ministers (G-24) attacked an International Monetary Fund (IMF) surveillance proposal even before the IMF could issue a press release. The IMF's intent was to "issue public praise for countries that follow sound economic policies and don't want to borrow from the agency" for those countries who wished to volunteer for the rating. In what was a shield for continued corrupt practices, the G-24 said the proposal would minimize lending to low-income countries and while the "instrument has been presented as 'voluntary,' there is a high probability that it would in fact become a requirement for lending, grants, and debt relief."

It is the understatement of the quarter century for the IMF to note that it "has historically had problems with that requirement - blowing the whistle on a country with poor policies might help avert a financial crisis by spurring reforms. But it might also trigger a crisis by frightening investors." (The 1999 Contingent Credit Lines program offering states "with sound economic policies that were at risk of financial "contagion" from similar countries with poor policies" expired in 2003 with few takers due to fears of being seen as weak.)

It is most interesting to see who the G-24 are and how its member rank on Transparency International's 2003 Corruption Perceptions Index.

The G-24 or the Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development was established in 1971 with the objective "to concert the position of developing countries on monetary and development finance issues." G-77 member state are welcome to attend G-24 meetings as observers while the People's Republic of China "enjoys the status of "Special Invitee" and addresses the plenary sessions of the G-24." G-24 member states are drawn from three regions: Africa, Latin America and the Caribbean, and Asia.

G-24 member countries are as follows:

  • Region I (Africa): Algeria, Côte d'Ivoire, Egypt, Ethiopia, Gabon, Ghana, Nigeria, South Africa, and the Democratic Republic of Congo.
  • Region II (Latin America and the Caribbean): Argentina, Brazil, Colombia, Guatemala, Mexico, Peru, Trinidad and Tobago, and Venezuela.
  • Region III (Asia and developing countries of Europe): India, Iran, Lebanon, Pakistan, Philippines, Sri Lanka, and Syrian Arab Republic.

It is instructive to track the G-24 member states on Transparency International's 2003 Corruption Perceptions Index.

TI's 2003 Corruption Perceptions Index measures perceptions of the degree of corruption as seen by business people, academics and risk analysts, and ranges between 10 (highly clean) and 0 (highly corrupt). On 133 countries rated, the cleanest, Finland was 1, and the worst was Bangladesh at 133. "Seven out of ten countries score less than 5 out of a clean score of 10, while five out of ten developing countries score less than 3 out of 10… Nine out of ten developing countries urgently need practical support to fight corruption."

As the Corruption Perceptions Index has been, like the Economist's Big Mac index, a reliable comparative measure, it is interesting to see how the G-24 faired, or failed as the case may be. Note that certain countries tie, such as Columbia and Peru at 59.

By CPI rank, then country:

43 Trinidad and Tobago; 48 South Africa; 54 Brazil; 59 Colombia, Peru; 64 Mexico; 66 Sri Lanka, Syria, China (not a G-24 member, but as it is granted Observer status); 70 Egypt, Ghana; 78 Iran, Lebanon; 83 India; 88 Algeria; 92 Argentina, Ethiopia, Pakistan, Philippines; 100 Guatemala, Venezuela; 118 Cote d’Ivoire, 132 Nigeria.

Unrated by TI as there were only two reports, but this author would mark them towards the bottom, with the DRC below Nigeria, especially as the DRC is a major blood diamond exporter through al Qaeda channels:

Gabon; Democratic Republic of Congo

That said, and knowing China's efforts to build diplomatic favor among world's weaker but still instrumental regional states, China's Xinhua statements take new meaning when it urges the IMF "to develop effective lending facilities to assist countries in the prevention of financial crisis," i.e., not this one, and in the "absence of appropriate crisis prevention mechanisms, [the IMF] should play a much larger role in reserve accumulation," i.e., make more funds available for "shrinkage."

Think what fun it will be if Wolfensohn does not seek another five-year term at World Bank. The foxes will demand "greater clout within the IMF and the World Bank." It is not too difficult to imagine a structure in which funds of developed economies are eased into grey area coffers.

IMF Plan To Promote Good Economic Policy Gets Cool Reception
World Bank Development News
2 October 2004

Gordon Housworth

InfoT Public  Risk Containment and Pricing Public  Strategic Risk Public  


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