NEWSFLASH: IMF/World Bank: Spore fails to impress

[kueytoc]

Press release by Asian Banker.

Published September 20, 2006

IMF/World Bank: Singapore fails to impress

The IMF and World Bank Annual Meetings in Singapore focused on correcting global imbalances, fighting corruption and apportioning more weight to developing countries. On the sidelines were China and India's currency valuation pressures and a large contingent from the Middle East seeking new ties with Asia.

After much careful planning and detailed execution, Singapore appears to have fallen short in its desire to impress the estimated 20,000 delegates in the city-state attending the recent annual meetings of the International Monetary Fund (IMF) and the World Bank.

At the heart of the matter was the banning of several prominent civic society organisation (CSOs) activists from entering Singapore, although they had been approved by the world organisations to attend. Also, in the spotlight was the banning of protests by CSOs except in highly restricted areas.

The president of the World Bank, Paul Wolfowitz, summed up the general sentiment about Singapore at the meetings when he said, “I would argue whether it has to be as authoritarian as it has been and I would certainly argue that at the stage of success they have reached, they would do much better for themselves with a more visionary approach to the process.” As Singapore does not have a strong CSO culture, his comments were generally ignored in the city-state.

But some regulars at the annual meetings thought that the IMF and the World Bank were “disingenuous” in their comments against Singapore. One regular delegate pointed out that this year, for the first time, CSOs were not permitted to enter the media room to interact with journalists. Restrictions on the activities of the CSOs worked in the global bodies’ favour – decisions that were well within their control to facilitate.

Outside of these concerns, it was business as usual. Mexican finance minister Francisco Gil Diaz, whose country received a slight boost in its quota in the IMF resolution voted this week, refused to join in the cry of other Latin American nations that questioned the quota reform. But Argentina and Brazil were the most vociferous in their protests, along with Egypt and India, countries whose quotas were not increased, unlike China, South Korea and Turkey, whose quotas were.

Several Latin American nations are pressing the IMF to use the purchasing power parity (PPP) method of calculating GDP, which would suggest greater representation for a country like Brazil, but not Mexico. The transformation of the IMF representation mechanism promised to be a long drawn issue in the future.

The World Bank’s attempt at making the fight against corruption as a central theme of the conference backfired when several central banks' governors questioned instead the world body’s own track record in this area. Joseph Stiglitz, the Nobel Prize winning economist and former World Bank chief economist questioned the president’s own track record when he was deputy secretary of defence in the US government.

Little was actually offered about the actual solutions for reducing corruption. Paul Volcker, former chairman of the US Federal Reserve Bank who is now investigating the Iraqi Oil for Food programme, remarked that countries that are corrupt should not receive aid. But as more countries are signing bilateral and multilateral trade agreements, bypassing the need for aid from the international bodies, the fight will be a long one.

But all parties were united in their grief over the assassination, just before the day of the conference, of Andrei Kozlov, deputy head of the Russian central bank, a champion in the fight against corruption and money laundering who campaigned for stronger governance in his country.

Kozlov’s peer in Nigeria, the impassioned executive chairman of the Nigerian Economic and Financial Crimes Commission Nuhu Ribadu said the fight must go on, for the people, as he admonished global financial institutions for protecting the assets of corrupt leaders, such as money stolen by his own country’s former dictator and laundered through banks in Europe. Ribadu called not for making poverty history, but for making the mismanagement of poverty history.

More harmonised and effective regulations were a theme for Institute of International Finance annual meetings, held just before the IMF and World Bank meetings. But William Rhodes, senior vice chairman of Citigroup, summed up the challenges best when on the subject of Basel II, said, “In the United States we don’t have our act together yet, and we’re asking other people to do it.”

For Asia, central bank governors bemoaned the lack of an amalgamated capital market or a payments and settlements centre, which they see as preventing the region from becoming integrated financially. But the possibility of a single currency like the Euro for the region as a means to this end was shot down by Pridiyathorn Devakula, governor of the Bank of Thailand.

On the sidelines of the meeting, Zhou Xiaochuan, governor of the People’s Bank of China pared down media speculation that China should revalue its currency as suggested by US Treasury secretary Henry Paulson, who was both at the annual meetings and scheduled to visit China after the meeting.

Liu Mingkang, chairman of the China Banking Regulatory Commission, however, publicly promised the international community that they will honour financial commitments and give foreign banks “treatment identical to that of local banks by December this year.” Liu, as well as vice minister of finance Li Yong, emphasised the role of small- and medium-enterprises to drive China’s growth. Li went further by admitting that the private sector pays more attention to the environment.

Banks from the Gulf Cooperative Countries (GCC) came to Singapore in full force. All the Middle Eastern banks that the Asian Banker interviewed, such as Burgan Bank in Kuwait, Doha Bank in Qatar and Islamic Development Bank in Saudi Arabia emphasised their interest in pursuing trade and infrastructure finance with banks in Asia.

Many Middle Eastern banks have the same profile in that they are generally small, highly liquid and therefore need counter-parties to invest in the long term infrastructure projects in the region. Many were in praise of Singapore as a country with a similar model that they would like to emulate. Unfortunately, this was not a sentiment shared by most of the other emerging economies that would have liked to have seen a better functioning social infrastructure.

Instead they were greeted by very high security fences and road diversions that some said were excessive and which made it inconvenient to participate in favourite Singaporean pastime of shopping in well air-conditioned malls. Singapore was certainly a victim of its own ambitions to impress.

[Chris]

I agree fully.

Overdoing in trying to please...in the wrong aspects. Lots of window dressing and little inside.

Inconvenient locals in a bid to impress foreigners but even the foreigners were not impressed.

[nemo72]

I agree fully.

Overdoing in trying to please...in the wrong aspects. Lots of window dressing and little inside.

Inconvenient locals in a bid to impress foreigners but even the foreigners were not impressed.

Strongly agreed.

[alien07]

so sad. someone's head is going to roll liao..

[jamomatt]

hehe, so different from the local news version where this IMF/World Bank meeting is the "best ever" :D

[ervine]

we put on such a big "show" just for them... quite ridiculous don't you think?

[seamonkee]

hehe, so different from the local news version where this IMF/World Bank meeting is the "best ever" :D

That's why I'm always sceptical of what I read on our local news... Just at the start of the IMF, I was reading the newspaper and I read nothing on the headlines except lots of self-praise on our high-tech security and ability to pull off such a HUGE event over Sept 11 period...

Come on, what are we trying to proof? I feel so embarassed even as I speak...

A case of overdress with no substance... I totally agree...

Temperate flowers planted along at Suntec in a tropical countries like ours? Come on, you think the delegates are nincompoops who can't tell that we are overly trying to impress even with such minute details?

I pity those shops in SUNTEC that suffered the most over this period with the huge drop in local patrons....