Conference on IMF Conditionality

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Ladies and gentlemen,
It gives me great pleasure to welcome you all to this conference on the important issue of IMF conditionality. Today, we are very fortunate to be joined by Mr. Ruben Lamdany of the Independent Evaluation Office at the IMF. Mr. Lamdany is the chief author of the very recent IEO report on conditionality, published only a week ago. He will present it here later today. We are also very pleased that Mr. Juan Zalduendo of the IMF’s Policy Development and Review Department is willing to contribute to this conference. I want to extend a very warm welcome to you both, as well as to the other panellists. Also a special welcome to government representatives from other Nordic-Baltic countries.

The Ministry of Finance is delighted to be hosting this conference. Since the present government was formed in 2005, we have paid particular attention to the multilateral financial institutions and their role in developing countries. In these matters, the issue of conditionality is important.

IMF has faced broad criticism for its policies towards developing countries through many years. Demands of privatisation and liberalisation have too often been imposed, excluding national stakeholders. At the same time, the strategies adopted have not been very successful in terms of long time results. I take this very seriously. The legitimacy of IMF depends on its reputation in these questions. We should therefore welcome different views on these questions from researchers, NGOs and others.

Conditions are necessary in any lender-borrower relationship. But the multilateral financial institutions should not impose ideologically based policies on their borrowers. It is neither right, nor an efficient way of stimulating economic development. National ownership to policy choices is crucial for reforms to succeed. 
I am a believer in public welfare and national ownership as means to ensure social justice and the democratic anchoring of decision making. The Nordic countries are characterised by a strong public sector that provides high quality health care, education, and social safety net. Our experiences show that such a model not only provides universal access to important services, but will also foster development and sound economic growth. There are many development strategies and more than one way to Rome!

In this context, we generally do not support any conditionality that imposes privatisation and liberalisation on country authorities. The Norwegian government takes a firm stand on this particular issue, as we demonstrated in the recent replenishment round of the World Bank’s IDA fund.

In 2006, we commissioned an independent report that examined to what extent conditionality in IMF and World Bank programmes was being used to encourage privatisation and liberalisation. The report was presented at an international conference on World Bank and IMF conditionality hosted by the Ministry of Foreign Affairs in November 2006. We see today’s conference as a following-up. Thus, we are particularly pleased to have the chief author of the 2006 report, Ms. Benedicte Bull of the University of Oslo, with us.

Coming back to the IEO report on structural conditionality that will be presented here today, I would like to commend the IEO for their insightful and thorough analysis. Since it was established in 2001, the IEO has delivered many valuable reports that have showcased strengths and weaknesses in the Fund’s work. There are essential virtues to an external evaluation based on openness, objectivity and dialogue. For us as members and shareholders, such external evaluations are very valuable complements to staff and management reports.

This year, IMF is at an important crossroad. The medium-term strategy under development is likely to bring changes to the Fund’s governance structure, activities, and financial situation. The global economy has been performing very strongly in recent years. While this is good news to the millions of individuals who have benefited from economic growth, it also means that the demand for financial assistance from the Fund is historically low. The subsequent need to consolidate the Fund’s financial position represents a good occasion to consider how the organisation should define its activities.

The Norwegian government wants the IMF to maintain its vital role in key areas such as surveillance and capacity building. This is in order to achieve macroeconomic and financial stability and in resolving short-term balance of payment problems. At the same time, there is a need to review the Fund’s activities in low income countries and the current division of labour between the Bretton Woods institutions. The IEO report is therefore timely and will be one of several inputs in that process, together with the Malan report and the IEO report on the IMF and Aid to Sub-Saharan Africa.

Today, structural conditionality is on the agenda. There are a number of questions to address, and I am confident that this conference will give valuable input and provide for a debate that is both stimulating and challenging.

I wish you a very productive conference!

Thank you.