The Guide for Staff Relations with Civil Society Organizations (CSOs) was prepared in 2003 to provide guidance to IMF staff for effectively engaging with CSOs: http://www.imf.org/external/np/cso/eng/2003/101003.htm

The Guide is now being revised to reflect the evolving role of the IMF and of its engagement with CSOs over the past 10 years. Dr. Bessma Momani, an independent consultant, is to identify and assess the best practices so that to provide recommendations on how to conduct public consultations on policy issues. CSO input is seen to be the key in revision and preparation of a new version of the Guide. Comments should be submitted no later than midnight (Washington DC time) on Friday, August 2, 2013. The details on submissions and further steps of the Process can be found here: http://www.imf.org/external/np/exr/consult/2013/csoguide/index.htm

May 31-June 1 of 2013, a conference on "Global Finance Between Rigor and Growth: Which Implications for International Governance?" was held in Lecce. Want to know more about speech from different dimensions on this topic, please click here.

Dr. Jo Marie Griesgraber, the executive director of New Rules for Global Finace was a key note speaker on the debate—“Are new rules for governance needed” by Dr. Biagio Bossone and Dr. Roberta Marra. Click here to read the speech on this issue.  

IMF Concludes Article IV Conclude Article IV Consultation with Myanmar and the First Review of Staff-Monitored Program

Note: New Rules for Global Finance is following closely the increasing engagement and activities of IMF and Myanmar, especially the participation of civil society, which wasn't mentioned in this press release.

Please see the Press Release No. 13/187 from IMF, May 22, 2013

http://www.imf.org/external/np/sec/pr/2013/pr13187.htm

Offshore Profit Shifting and the U.S. Tax Code

Senate Permanent Subcommittee on Investigations

May 21, 2013

             The Senate Permanent Subcommittee on Investigations held the hearing “Offshore profit shifting and the U.S. tax code – Part 2 (Apple Inc.)” at the Dirksen Senate Office Building on Tuesday, May 21. Three panels, including law experts, representatives for Apple Inc, and US government officials from the Internal Revenue Service and Department of Treasury, provided testimony and answered the Subcommittee’s questions.

            The main argument from the Subcommittee, led by Chairman Levin, is the fact that Apple Inc. has shifted taxable income generated by its intellectual property rights (IPR) – 95% of which is produced in the U.S.  – offshore for the purpose of tax avoidance. While fully enjoying the legal protection of its IPR by the U.S. government, Apple signed agreements with its three subsidiaries in Ireland in 2008 and 2009 authorizing the transfer of the economic rights to its intellectual property (i.e. profits)  to its Irish subsidiaries that are subject to little to no income tax. As a result, Apple pays less tax and the tax burdens are distributed on to other tax payers, including small companies that are not able to operate overseas and hard-working individuals. During the hearing, representatives from Apple, including its CEO Tim Cook, reaffirmed that its behavior is legal under the current international tax law. In addition, it points out the problem of the relatively high tax rate in the U.S., its negative effect on the competitiveness of U.S. companies, and the need to reform the tax code. Tim Cook stated that he has no intent to bring the offshore profit back to the US under the current tax code. The legal experts from the first panel made suggestions to reform the tax code, including reducing the tax rate to below 15%, increasing the transparency on multi-national corporations, especially in terms of where they record income, and the amount of tax they pay, and imposing a minimum amount of tax for transfer-pricing. It is still uncertain on whether this type of dispute would lead to a reform on U.S. tax code.

Details of the hearing – including panelist information and video – are available at: http://www.hsgac.senate.gov/subcommittees/investigations/hearings/offshore-profit-shifting-and-the-us-tax-code_-part-2

Last month, central bank governors, finance ministers, bankers, academics, lobbyists and members of civil society from around the world arrived in Washington, DC for the 2013 IMF-World Bank Spring Meetings. New Rules for Global Finance was active hosting, coordinating and attending meetings. See our recap of the Spring Meeting events below - including a discussion on global financial reforms hosted by New Rules with FSB staff, central bankers from emerging markets and developing economies (EMDEs) and civil society. Looking beyond the Spring Meetings, three other issues emerged in April that we will be working on.

First, the debate on austerity was reignited by the recent debunking of the influential paper by Carmen Reinhart and Kenneth Rogoff which claimed that 90 percent debt-to-GDP was the threshold for economic growth. In April, a graduate student and two professors of economics at the University of Massachusetts at Amherst discovered an error in Harvard Professors Reinhart and Rogoff's data - which provoked to other critiques of their methodology. These findings changed the outcomes of this study and raised doubts about the efficacy of austerity. Even the IMF, long a prescriber of austerity, is now struggling with its position on this issue. It is becoming clear that austerity measures are not the recipe for economic recovery. Over the last 4 years, Europe has been under the spell of austerity and in the last quarter of 2012, theEurozone as a whole contracted for the first time ever.

The reality is that austerity, especially public spending cuts, harm the poor disproportionately - which in the end increases the need for more public spending while higher unemployment reduces government revenue. Although the IMF is beginning to shift its rhetoric, its loan conditions and policy recommendations for member countries do not reflect this change. In the case of Egypt, the IMF is requiring a string of austerity measures to be implemented before Egypt is eligible for the $4.8 billion loan it has been negotiating for two years. Despite the dynamic political and economic changes in Egypt, the IMF's policy recommendations have remained the unchanged since 2010 (pre-Hosni Mubarak).

Second, the recent bout over capital requirements for foreign banks between the US Federal Reserve and EU commissioner Michel Barnier underscores the need for greater cooperation on financial reforms. Mr. Barnier argues that by requiring EU bank's US-based subsidiaries to hold more capital locally, the US is creating barriers to the US financial market (accusing the US of protectionism). This is not the case. The Fed's rule is geared to protect the US taxpayers from the bailing out of foreign banks. When global systemically important banks (G-SIBs) face heavy losses or failure, their foreign subsidiaries close first and the host-country economy - in this case the US - suffers losses.

To manage this dilemma, the global financial system needs a "resolution regime" that winds down banks and their subsidiaries. With such a regime in place, the US Fed would be less inclined to require foreign subsidiaries to hold additional capital locally - since resolution procedures would protect the US from bank collapses overseas. The Financial Stability Board (FSB) has been developing an effective resolution regime policy since 2010 and recently reported its progress to the G20. Unless the global financial system intends to continue operating in the "too-big-to-fail" paradigm, we need to reduce uncertainty about financial institutions that can and will fail. This requires a greater international cooperation on developing an effective resolution regime - a process that must include developing economies (non-G20), as they are host to hundreds of bank subsidiaries and suffer disproportionately when G-SIBs collapse.

Lastly, and an issue that was raised at the Spring Meetings as well, is the continued inability of the United States to ratify the2010 IMF reforms - the only action impeding their implementation. The US agreed to approve these reforms by November 2012. It is now 7 months overdue. It remains unclear when the US will ratify the reforms. There is growing concern about the reform process coming to a halt. During the Spring Meetings, IMF Executive Director for Brazil, Paulo Nogueira Batista, expressed his concern that the IMF reforms were "losing inertia." Reforming the governance of the IMF means decision-making that is more inclusive, balanced and reflective of emerging markets and developing countries. We anticipate that the US Administration will submit legislation to Congress before the end of the year. New Rules will be urging Congress to pass these reforms, but we will need your support. To support these efforts, please visit us at IMF Reform Letter or Support New Rules.

To read the rest of our May 2013 Newsletter, click here

The Financial Stability Board:

Views from Insiders and Campaigners

Saturday, April 20, 2013

Executive Summary:

This report documents the discussion and outcomes of the session FSB: Views from Insiders and Campaigners at the 2013 IMF-World Bank Spring Meetings in Washington DC. This session brought together secretariat staff from the Financial Stability Board (FSB), central bankers from emerging market and developing economies (EMDEs), and experts from civil society to discuss the major challenges in global financial reform from the perspective of developing countries. Country representatives shared their views and all engaged in a constructive discussion on financial reforms – including important issues that are not currently on the FSB agenda.

Country Representatives:

Mr. Turalay Kenc, Deputy Governor, Central Bank of the Republic of Turkey

H.E. Dr. Hasan, Deputy Governor, Central Bank of Jordan

Mr. Grant Spencer, Deputy Governor, Reserve Bank of New Zealand

Mr. Ajith Nivard Cabraal, Governor, Central Bank of Sri Lanka

Panelists:

Michael Taylor, Financial Stability Board (FSB) Secretariat Staff

Lori Wallach, Director, Global Trade Watch, Public Citizen

Chair:

Jo Marie Griesgraber, Executive Director, New Rules for Global Finance

Key Points:

●        Michael Taylor reviewed the mandate of the FSB, the Regional Consultative Groups (RCGs) and the FSB’s recent work geared toward financial service regulations and fiscal policy implementation.

●        Mr. Grant Spencer laid out his position that the FSB does not focus on the situation of small countries.

●        Mr. Turalay Kenc discussed the importance of accounting standards and credit ratings agencies.

●        H.E. Dr. Hasan advised how he would like to see more credible policies being implemented by the FSB.

●        Mr. Ajith Nivard Cabraal addresses his concern over banking regulations and gives examples of productive counter policies. He also advocated an increased inclusion of Civil Society Organizations regarding financial stability reforms.

●        Lori Wallach highlighted that the authority of national regulators could be jeopardized by obligations in trade agreements that FSB member countries are currently negotiating

●        Jo Marie Griesgraber presented her concern for the two-way flow between Regional Consultative Groups (RCGs) and the FSB but even more so, how non-RCG/non-FSB countries can share their suggestions and concerns of FSB actions and inactions.

●        Questions for the panelists include: transparency and accountability for the FSB’s fiscal policies, concerns about trade regulations, Basel III’s impact after the 2008 crisis and more.

Treasury Under Secretary Lael Brainard announced in the FY2014 budget that it seeks legislation to implement the IMF quota and governance reforms agreed to in 2010.  This legislation is said to reduce United States participation in the New Arrangements to Borrow by approximately $63 billion and increase the size of the U.S. quota by an equal amount.  It would also authorize the U.S. to accept an amendment to the International Monetary Fund (IMF) Articles of Agreement that will facilitate changes in the composition of the IMF Executive Board while preserving the U.S. seat on the Board. As noted in the Administration's request, the legislation will be submitted separately to Congress. This legislation is also said to be essential in order to preserve U.S. leadership and veto position in the IMF and to maintain a well-resourced and effective IMF.

The Monetary Policy and Trade Subcommittee Hearing on “Evaluating U.S. Contributions to the International Monetary Fund” was held on Tuesday, April 24, 2013 and chaired by Representative Campbell and Members of the Sub-Committee. The hearing examined the U.S. role in the IMF and the Obama Administration’s request that Congress approve a much larger U.S. quota contribution to the IMF.

Testifying before the panel, Lael Brainard, Treasury's undersecretary for international affairs defended the safety of U.S. contributions to the Washington-based lender. As the only witness, Lael Brainard pledged to push the IMF to toughen its analysis of member countries’ exchange rates.

“The IMF is now providing much greater in-depth coverage of exchange rates, as well as related analysis on reserves, current-account imbalances and capital measures,” she said in prepared remarks to a House Financial Services subcommittee. “We will continue to urge the IMF to actively exercise its oversight role in this area.”

To see the Justification for Appropriations FY 2014 Budget Restquest, click here

To see the Memorandum on the subject of the House of Representatives' April 24, 2013, Monetary Policy and Trade Subcommittee Hearing on “Evaluating U.S. Contributions to the International Monetary Fund”, click here

To view an article by Bloomberg with further details, click here

To view Tweets from New Rules, click here

As you may know, the Obama Administration is working with the Congress to introduce legislation affecting the International Monetary Fund (IMF).  The legislation would implement the 2010 G-20 agreement in Seoul on financing the IMF and reform of its governance. One important reform is the move to an all elected Executive Board (an initiative of the US government), which will create greater flexibility for countries to re-form constituency groups, since the US, Japan, Germany, the UK and France will all be able to have additional members in their constituencies.* Overall, we recognize that this reform package is imperfect, but this package must be approved by Congress before we can move forward with other reforms. 

A group of organizers composed a letter supporting enactment of this legislation by the US Congress. The letter, signed by over 130 individuals, was delivered to the leaders of the House and Senate as well as other members of the House and Senate on March 11, 2013. To view letter, click on link below:

Letter to Speaker Boehner

Sign-on:

We are continuing to collect signatures from those that support this initiative. If you would like to urge the US Congress to approve IMF reforms, please contact Nathan Coplin ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ) who is collecting signatures (see up-to-date list below).

Please also indicate any affiliation (for identification purposes only) that you would like to be associated with your participation.  Listing an affiliation is not necessary.

Signatures  (Affiliations are for identification purposes only)

The African Regional Technical Assistance Centers (AFRITAC) are part of the IMF’s Africa Capacity-Building Initiative, launched in May 2002. Responding to calls from African leaders, including under the New Partnership for Africa’s Development (NEPAD), the Initiative promotes strengthening the capacity of African countries to design and implement their poverty-reducing strategies, as well as to improve the coordination of capacity-building technical assistance in the Poverty Reduction Strategy Paper (PRSP) process.

The AFRITACs are financed by contributions from a number of donors, the IMF, as well as host and beneficiary countries. Current donors include the African Development Bank, Australia, Brazil, Canada, the European Investment Bank, the European Commission, France, Germany, Italy, Kuwait, Luxembourg, the Netherlands, Switzerland, and the United Kingdom.

The centers’ activities take place in close cooperation with the African Development Bank and donor partners. This facilitates a coordinated design, implementation, and monitoring of ongoing technical assistance programs in member countries.

AFRITAC East

Since its inception, East AFRITAC (AFE) has adopted a demand-driven, hands-on, and output-oriented approach to TA deployment in Eritrea, Ethiopia, Kenya, Malawi, Rwanda, Tanzania, and Uganda. East AFRITAC's presence in the region is a hallmark of its TA delivery mode, which allows for prompt response in dealing with requests from member countries, while bringing to bear a deep knowledge of local context. Another key aspect is the development of local counterpart teams, which helps to contribute significantly to country ownership, promotes sustainability of the underlying reform effort, and leads to the creation of a future pool of national and regional expertise.

The Center effectively strengthens its support with strategic advice and technical backstopping from IMF Headquarters, ensuring the consistency, relevance, and quality of the assistance it provides. East AFRITAC does not operate in a vacuum, and its efforts are fully integrated with those of TA delivered from IMF headquarters in the region. TA efforts of AFE are a part of a bigger effort of the IMF, by which Headquarters provide the strategic direction and initial diagnostic evaluations that inform the Center's work. The Center's activities are thus embedded in initial and follow-up diagnostic missions from IMF headquarters, which often contribute to the foundation for the work that East AFRITAC then undertakes.

Internally, the East AFRITAC has adopted a results-based management framework anchored in an annual planning, implementation, and monitoring cycle. The framework identifies the main objectives for each area of work, the expected (and achieved) inputs and activities, main outputs, results, as well as next steps. The framework also makes explicit the links of East AFRITAC support to member countries reforms and poverty-reducing strategies, and the involvement of other donors. The management model for the Center as a whole translates into country- and sector-based frameworks. Member countries, through the Steering Committee, have expressed their appreciation of the clarity brought to the Center's operations through this approach.

As per its mandate, East AFRITAC has put considerable effort into liaising closely and coordinating with development partners in the formulation and delivery of TA. In this regard, East AFRITAC had rightly anticipated a trend towards greater donor cooperation in most of the countries of East Africa. Overall, the Center's model of TA delivery has enabled better alignment of capacity-building activities with country-driven initiatives in its areas of work, and has facilitated the tapping into, and use of, expertise available within the region.

In line with the main priorities set for the work of the East AFRITAC by its Steering Committee, the Center's mandate includes the following areas: Revenue Policy and Administration, Public Financial Management, Financial Sector Regulation and Supervision, Monetary Policy and Operations, Economic and Financial Statistics, Macro-Fiscal Analysis.

AFRITAC West

West AFRITAC (AFW) has been serving Benin, Burkina Faso, Côte d’Ivoire, Guinea, Guinea-Bissau, Mali, Mauritania, Niger, Senegal and Togo since 2003, supporting implementation of their PRSPs in areas of the IMF’s core expertise: macroeconomic policy, revenue policy and administration (both in customs and tax administration), public financial management, debt management and financial markets development, supervision of financial institutions, government finance statistics and real sector statistics. There are many concrete examples of AFW’s contributions to achievements in all of its recipient countries, ranging from assistance in customs administration to facilitate trade, establishing large taxpayer offices, strengthening fiscal analysis through better public financial management, improving the quality and timeliness of statistical data, developing capacity for undertaking debt sustainability analyses and designing sustainable borrowing policies in post-HIPC completion point countries, and developing the legal and regulatory frameworks for financial institutions.

AFW countries need to accelerate implementation of their PRSPs to make a stronger dent in growth, which is all the more important with the global financial crisis putting at risk the fragile macroeconomic gains of the past. AFW has experience and expertise to help AFW countries build their macroeconomic management capacities, focused on:

• Strengthening government institutions and central banks, which are critical to promoting sustainable economic growth.
• Developing financial markets to support a strong private sector.
• Strengthening statistical capacity for sound macroeconomic analyses, policy making and better information to the public.
• Making progress in regional integration and harmonization.

AFRITAC Central

Central AFRITAC (AFC) has been serving Burundi, Cameroon, the Central African Republic, Chad, Equatorial Guinea, Gabon, the Republic of Congo and the Democratic Republic of the Congo since January 2007, supporting implementation of their PRSPs in areas of the IMF’s core expertise: tax policy and revenue administration (both customs and tax administration), public financial management, debt management and financial markets development, supervision of financial institutions, and real sector statistics. AFC also supports regional integration and harmonization efforts directly through TA provided to regional institutions of the Central African Economic and Monetary Commission (CEMAC). There are many concrete examples of AFC’s contributions to achievements in all of its recipient countries, ranging from assistance in completing the Central African Republic’s data base for the decision point under the enhanced HIPC Initiative to preparing action plans for second-stage reforms in tax administration and customs in Cameroon and Gabon, respectively.

The needs for TA in the IMF’s area of competence remain high among AFC’s member countries. A majority of these countries have experienced civil war in the recent past, and several are still in the early phase of rebuilding institutions and technical capacity. Building on the experience gained during the first phase, the priorities for AFC’s assistance are as follows:

• Strengthening tax and customs administrations in the context of developing regional common markets and the simplification and harmonization of customs procedures.
• Enhancing public financial management, including support for implementing regional directives at country level.
• Developing local and regional financial markets for public debt within the context of strong debt management and to support investment in the region.
• Improving the supervision of financial institutions, including through strengthening the regulatory framework of regional financial markets.
• Strengthening national macroeconomic statistics as well as harmonization of regional statistics.
• Organizing regional seminars and capacity building activities in macroeconomic management and policy design and analysis.

AFRITAC South

South AFRITAC (AFS) is a collaborative effort between the International Monetary Fund (IMF) and several bilateral and multilateral donors aimed at providing technical advice in core macroeconomic and financial management areas and provides technical assistance and training to Angola, Botswana, Comoros, Lesotho, Madagascar, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Zambia, and Zimbabwe.

The main mandate of AFS is to provide capacity-building assistance, facilitate the reform process in member countries, and support the region’s integration in the world economy.

As a regional center, which is close to the countries/territories it serves, AFS offers several advantages including: (a) decentralized and better tailored delivery of technical assistance (TA) to the particular needs of the region; (b) enhanced country ownership and accountability; (c) quicker and more efficient response to TA requests; (d) closer coordination with other TA providers in the region; and (e) more focused subject-specific and hands-on training for local officials.

AFS is governed by a Steering Committee (SC) composed of representatives of AFS countries and donor countries and agencies. The committee approves the work plan and priorities for the coming period.

Staffing of AFS reflects member countries’ TA needs. The size and composition of the team of resident experts is tailored to those needs and priorities of participating countries. At present, the center has five long-term resident advisors in the following areas: revenue administration and taxation, public financial management, macroeconomic statistics, banking supervision, debt management. The activities undertaken by the center follow a detailed workplan, which is revised and approved by the Steering Committee. While it provides the general guidelines for the center’s work, the plan is applied flexibly and could change according to emerging needs and requests. The center is financed by the IMF, multilateral and bilateral donors.

The plan is applied flexibly and could change according to emerging needs and requests. The center is financed by the IMF, multilateral and bilateral donors.