Washington — The World Bank and International Monetary Fund would benefit if their individual roles were better defined, World Bank President James Wolfensohn said.
"Cooperation often works best where the institutions come with well differentiated mandates and policy roles," Wolfensohn said in his statement to the IMF's advisory committee, which met today.
Especially in areas where the two global lenders "overlap," including their financial-sector loans, "cooperation shouldn't lead to "a blurring of the roles and mandates of the fund and the bank," he said.
Wolfensohn's call for a clearer division of labor comes as some of the lenders' critics say that the IMF should make only short-term loans. Critics say the IMF, as a condition for the loans, often tells countries to slash social spending. That's one of the complaints being raised by thousands of protesters who are trying to impede access to the lenders' annual spring meetings, which conclude tomorrow.
Wolfensohn stopped short of offering specifics on how better to divide the tasks of advising developing countries on how to balance their budgets, and lending those nations money when they have trouble financing their balance of payment deficits.
The debate should involve all World Bank member countries, those who borrow most and those who provide the institution with the bulk of its capital, he said.
The IMF's advisory committee suggested the fund begin to charge countries that borrow too often or too much higher interest rates.
The International Financial Institution Commission, a panel appointed by the U.S. Congress, has recommended some specific changes. For one thing, it suggests that IMF loans mature in up to four months. Currently, IMF borrowers have as long as three years to pay back loans.
The commission called on the World Bank to take over all longer term lending, which would entail pulling the IMF out of dozens of African and Asian countries that now borrow from it in exchange for guidance on how to run their economies.
The World Bank doesn't want the IMF to get out of the long-term lending business altogether, Wolfensohn said. "Successful long term development requires both the consistent pursuit of good macro economic policies - the fund's area of expertise - and good structural and social policies," he said, calling those policies the World Bank's "comparative advantage."