Can the World Bank (WB) and the International Monetary Fund (IMF) be reformed or should they both be boycotted and dismantled? This is the growing debate that has been fuelled in the aftermath of the organisations’ annual meetings in Singapore last week.

Both these international financial institutions attempted a ‘make-over’ of sorts to overcome a crisis of legitimacy, budgetary constraints and an identity crisis over their heavily criticised roles in the global economy. Under siege, the IMF tinkered with its member nations’ voting structure as a prelude to further minor adjustments, leaving richer nations still firmly in control even as the fund’s neo-liberal policies continue to have disastrous implications for poorer nations.

The WB, on the other hand, launched a public relations offensive, with its good governance and anti-corruption drive.

Critics say this drive is misguided and could hurt aid to poorer countries while allowing the bank to sidestep national democratic institutions. Some analysts were not buying these ‘reforms’, pointing out that both these global financial institutions are part and parcel of the same controlling system of disciplinarian neo-liberalism hailed by Wall Street.

“There’s no doubt in my mind that the fund and bank cannot be reconstructed,” said Glasgow-based political scientist and author John Hilley, who has written about neo-liberal militarism, The Fund and the Bank.

“Both need to be replaced by bodies concerned with people and planet rather than austerity prescriptions and business values.” Critics say the elite closure and containment of dissident voices in Singapore should serve as a reminder that these bodies cannot be ‘constructively engaged’. Hundreds of civil society activists were forced to divide their numbers between Singapore and neighbouring Batam in Indonesia.

Moreover, the IMF’s lending portfolio is no more than $35 billion. This is in sharp contract with the foreign reserves of developing countries, which have surged in recent years on the back of higher prices for exports of oil, raw material and certain agricultural products.

Not surprisingly, developing countries now have more than double the foreign exchange reserves of the most industrialised countries at their disposal, observed Toussaint. But absurdly, he added, these developing countries are using their reserves to repay debts, to lend to US and Western European treasuries, or to contract new debts with private foreign banks or financial markets instead of using them to invest in education, healthcare, and agrarian reform. Activists feel that with the fund and bank in such a relatively weak financial position, the time is right for developing countries to push for alternatives such as a ‘Bank of the South’ or alternative regional trade agreements such as the Bolivarian Alternative involving Venezuela, Bolivia and Cuba. But this may not be enough.

They are also questions whether capitalism as a system is capable of promoting a just distribution of wealth in the South, pointing out that elites have benefited from the system even as income disparities within their countries widen.

Major structural reforms looking into the ownership of common goods and public resources may be required. — IPS