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Extractive Industries Transparency Initiative Struggles to Bring Accountability to IFIs
Category: Development
Friday, October 3, 2008
The World Bank and International Monetary Fund (IMF) have fallen short of benchmarks set by the Extractive Industries Transparency Initiative (EITI) to incorporate accountability measures in programs implemented in resource wealthy countries. Both International Financial Institutions’ (IFIs) unwillingness to fully integrate EITI in their programs has weakened the initiative and opened the door for continued abuses of resource wealth in developing countries.
Launched by Tony Blair in 2002, EITI sets global standards for companies to publish what they pay for the extraction of natural resources, and for host governments to disclose payments received for these resources. Both the World Bank and IMF pledged support for EITI in 2003. “Transparent reporting of natural resource revenues will help establish credibility, ensure accountability, and inform the political debate,” said the IMF’s Peter Heller.
However, according to an assessment by Bank Information Center and Global Witness, neither IFIs have implemented measures to ensure that their programs are compliant with EITI. According to the study, revenue transparency constituted a benchmark in sixty percent of IMF lending programs to resource-rich countries, but in less than six percent in non-lending country programs. Additionally, contract disclosure between governments and industries dealing with natural resources was absent from ninety percent of IFI programs in resource-rich countries.
Publish What You Pay, a London-based NGO that monitors the deleterious effects of poorly managed resources in developing countries, states that “transparency in the extractive industries [should] be made a condition of all lending, development and technical assistance programmes by international financial institutions.” The group has cited corruption in natural resource extraction as a primary source of conflict in Sierra Leone, the Democratic Republic of Congo, and other resource wealthy developing countries.
The World Bank and IMF are quick to lobby for increased transparency from developing country governments. The World Bank’s Anticorruption and Governance Thematic Group encourages anti-corruption activities in all Bank activities, both lending and non-lending. However, programs like these rarely go far enough to ensure that IFIs do not participate directly or indirectly in non-transparent resource exchanges. The EITI – which includes governments, companies, civil society groups, and investors – should be more fully integrated into World Bank and IMF programs. Promoting transparency from without begins with promoting it from within.
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