CHAPTER THREE - REFORMING THE BRETTON WOODS INSTITUTIONAL FRAMEWORK:
FROM ADAPTATION TO ACCOUNTABLE "REINVENTION"

6. TRANSPARENCY AND ACCESSIBILITY TO PUBLIC REVIEW

One of the most frequently-heard complaints about the IFIs is that they are much less open than they should be to public knowledge and scrutiny. Harvard University economist Jeffrey Sachs accuses the IMF in particular of being more secretive than the CIA! We heard from our Executive Director Ian Clark that Canada has been among those pushing for greater openness, but that other countries are resisting. In the case of the IMF, there is a very real concern over how much, and how soon, it should reveal of what it knows about the sensitive situations of particular countries (assuming that it does know what is happening). Some such as John Williamson have argued for the publication of "article IV" surveillance reports. Others such as Professor Wendy Dobson of the University of Toronto School of Business have worried that, without a careful reconsideration of the issues, releasing certain kinds of damaging information could precipitate the very kinds of market panics ¾ as occurred in Mexico ¾ that it might be seen as helping to avert through inducing a more gradual adjustment. In general, however, we think that the earlier and more regular the disclosure of what the IMF knows and is doing about it, the better. Publics need to have access to the grounds for IMF actions, and markets are more likely to respond appropriately with more information rather than less. Ways to increase the level of transparency without risking sensitive aspects of the IMF's role should therefore be explored. As put by E. Gerald Corrigan, chief financial advisor to Goldman, Sachs & Co. at a recent Trilateral Commission meeting in Copenhagen: "The dialogue may be private but if the overall framework within which it is taking place is open then analysts may see the warning signals for themselves." 20

With respect to the World Bank, it has set up a Public Information Office (in January 1994) to provide interested parties with access to various documents, including appraisals and evaluation reports. Since September 1994, an "Inspection Panel" has been operational for the purpose of receiving and investigating complaints that the Bank has not followed its own policies and procedures - in respect of environmental criteria, for example. The Bank has promised that all stages in the process for handling and following up complaints will be publicly available, including the panel's report on the investigation, if any, and management's response to it, as well as an annual report to the members of the Bank's executive board. However, there have been criticisms, for example, from Ian Vasquez of The Cato Institute during the Committee's Washington roundtable, that the panel "is controlled by World Bank staff ". The panel is "functionally independent" in that it reports directly to the executive board; however, it is not an external "third party" review mechanism. Also, investigations can only proceed with the approval of executive directors.

Therefore, the Committee recommends that, in light of the importance of public disclosure of IFI activities and the basis for IFI decisions, as well as of putting information promptly into the marketplace, the policies of the IMF and of the multilateral development banks be examined with a view to allowing maximum transparency and accessibility to public review, consistent with their reformed mandates as recommended in this report. In particular, the focus in terms of the IMF should be on how its surveillance process functions, and in terms of the World Bank on the adequacy of its new access to information and inspection procedures.