In a thousand words: What is the World Bank? What is the“MFD”?
Photo: Peoples' Global Conference
*The following is an excerpt from our paper, Implementing the World Bank Group’s MFD: Reinforcing Corporate Capture of the Global South .
The International Monetary Fund (IMF) and what came to be later known as the World Bank Group (WBG) were established in the 1944 Bretton Woods Conference held at the United States (US). The World Bank was founded as the International Bank for Reconstruction and Development (IBRD) for post-World War II loans. It later shifted towards broader lending for infrastructure and other “development” purposes.In 1960 the International Development Association (IDA) was founded to facilitate loans especially to the poorest countries.IBRD and IDA together comprise the World Bank.
The World Bank Group, as it is known today,is made up of other affiliated institutions all with a focus on assisting private investment towards developing countries. The International Finance Corporation (IFC), focused on lending and supporting private corporations,was founded in 1956. Ten years later, the International Centre for Settlement of Investment Disputes (ICSID) emerged as an institution to decide on cases between investors and governments. The Multilateral Investment Guarantee Agency (MIGA) was then founded in 1988 to provide risk insurance and other guarantees to private investors in developing countries, to protect capital in cases such as expropriation by the state. [i]
The US and the IMF-WB
Since their founding, the United States (US) has played a huge role in the direction of the IMF-WB.The World Bank describes the US as a “leading force” in its establishment. [ii]In terms of location, both the headquarters of the IMF-WB are located in Washington D.C. Among the 189 countries of the IMF, the US holds the highest shares in the Fund’s unit of account (or “special drawing rights”) at 17.46%. This correlates to voting power; one vote from the US has the weight of 1/6of the total. [iii]
The IMF-WB in the neoliberal era
1970s-1980s – Structural adjustment
This is the IMF-WB focus during the decade of oil shocks, high developing country debt and the Cold War. “Adjusting” economic policies were required for loans, with “reforms” towards export-orientation, deregulation and the privatisation of state enterprises. IMF-WB structural adjustment drew ire of movements for forwarding the US economic agenda while sinking economies further into debt, reducing wages and increasing unemployment.
1990s-2000s – “Poverty reduction”
Adjustment for “poverty reduction” continued, with privatisation and “private sector” promotion. The WB’s Poverty Reduction Strategy Papers (PRSP) and the IMF Poverty Reduction and Growth Facility (PRGF) were established. PRSPs were poverty analysis documents prepared by countries using supposedly participative means, which were used by the IMF as basis for PRGF policy conditions and required for countries to access debt relief under the WB’s Heavily Indebted Poor Country Initiative. Conditionalities continued to belie IMF-WB claims to “country ownership,” while country-level participation was criticised as “shallow,” “staged by governments” and ignoring civil society demands.
2010s-present – Even more systematic private sector-led “development”
The WB increased support for private sector roles in development. It has pushed public-private partnerships especially in infrastructure, considered by critics as “privatisation by other means.” It argued that