IMF Answers Inner City Press on Malawi Retrenchment, Says Global Fund Steps In to end of 2016-17 Fiscal Year

By Matthew Russell Lee

UNITED NATIONS, December 7 -- When the International Monetary Fund held is biweekly briefing on December 3, Inner City Press submitted a number of questions, including about Malawi but also on Burundi and how much the IMF projects the economy will contract, given the crisis triggered by Pierre Nkurunziza's third term, see below.

   Inner City Press asked, "On Malawi, it is reported that the IMF''s 'recent decision to withhold its latest loan money to the Malawian gov''t could have dire implications for health care. Malawi has put on hold the hiring of 51 medical graduates and a host of health professionals.' What is the IMF''s response?"

 On December 7, an IMF Spokesperson returned with this:

"Currently, the high rate of inflation is eroding living standards of the most vulnerable segments of the Malawian population, and is also dampening private sector confidence, reducing investment demand, and curtailing the economic growth needed to reduce poverty. IMF staff policy advice therefore recommends a certain amount of fiscal retrenchment, combined with tight monetary policy over the short term, as these are necessary to the disinflation process. During this period, IMF staff recommend that Government carefully prioritizes expenditure so as to protect both vulnerable groups and social spending. In this respect, IMF staff are pleased to note that Government is proceeding with the hiring of the graduating medical students and other health care workers, and has arranged for the Global Fund to pay the associated costs up to the end of the 2016/17 fiscal year."

   During the December 3 briefing, IMF spokesperson Gerry Rice read out Inner City Press's Burundi question (and its question on Zambia, below), then said the following as to Burundi, audio here:

“In terms of the outlook in Burundi, it's effected by the decline in economic activity there and the . withdrawal of donor support. Confidence in the economy has been weakened by the political climate and adverse security developments. The growth rate in Burundi, which we had initially projected 5% in 2015, is now estimated at minus 4.1% in real terms.... In the current environment, completion of the 7th and the 8th review under our program there is not possible and as such, Burundi's program with the IMF, which is an ECF arrangement, is now off track.”

  Inner City Press had also asked, on Zambia, it is reported that the IMF “proposed a $1 billion facility which the president had turned down. A sticking point for the president was the insistence by the IMF that government commit to drastic reductions in expenditure, particularly on road construction.” What is the IMF's response?

   Rice said that no program has been “formally” requested, but that the Zambian authorities committed to “internal consultations.” Inner City Press had asked about Sri Lanka, and the same “no formal request yet” answer was given.Audio here.
 Inner City Press also asked about Malawi and, lastly, Ghana; more on this to follow.

On October 29, Inner City Press asked IMF spokesperson Rice “in Jamaica, the National Democratic Movement has blamed the IMF for the country's 'health-care system becoming a national disgrace.' What is the IMF's response?”

  Rice during the IMF's embargoed briefing read out this question, audio here, and said he does not agree, that Jamaica's 2015-16 budget includes an increase for the Ministry of Health. Audio of full answer here.

  The IMF left unanswered, for then, Inner City Press' question about Antigua and Barbuda, below, then later sent this: "With regards to your question on Antigua Barbuda, I am afraid we won’t be able to help. I checked with Mr. McIntyre and he tells me that he does not recall making any comments on the issue you referred."

 Inner City Press has replied: "Thanks for getting back to me. I should have been clearer - it wasn't that he'd commented directly on the Antigua and Barbuda scandal; he was quoted about “concessions.” See, e.g.,http://antiguaobserver.com/imf-advises-cut-concessions/ and compared to the lobbying for concessions detailed in the U.S. government charge sheet. The request is for some IMF comment on this, including given the IMF's oft-expressed anti-corruption concerns."

 The IMF, it seems, should be more responsive: the Gleaner for example opines that “in 2014, Jamaica paid $138 million more to the IMF than it received from it. We are constantly being told Jamaica passed the IMF test. Look at the punitive primary surplus imposed on Jamaica. At 7.5%, it is way above what is being asked of any other country in the IMF program. It is 4% for Cyprus, 3% for Ireland, 3% for Greece, 3% for Portugal and a puny 1% for Ukraine. One has to wonder why Jamaica is being treated this way.”

  Here is another question Inner City Press submitted on October 29, still without answer:

In light of the UN Special Rapporteur's report on human rights (non) compliance by the World Bank, presented this week at the UN, please summarize how the IMF considers the human rights impacts on its decisions.

  We'll have more on this.

  Back on July 8 when the International Monetary Fund released reviews and papers about the United States, complete with support of the Dodd Frank Act and mentions of anti money laundering protection Inner City Press asked about the proposal to raise the definition of Systemically Important Financial Institution from $50 billion up to $500 billion and if tight AML strictures are to blame for cutting off remittances to Somalia.

  Aditya Narain, IMF mission chief for the Financial Sector Assessment Program and deputy director, Monetary and Capital Markets department, told Inner City Press that the IMF believes such definition should give predictability, but should be based on risk and not necessarily only asset size.

  Narain told Inner City Press, "On the first one, our general belief is that supervisory approaches should be risk based, and therefore the materiality and proportionality of institutions should be taken into account for to develop supervisory frameworks. At the same time, we also recognize that it’s important to have some clear rules, regarding a unit, in this case size of institutions, because not only does it set a baseline of expectations, but it also provides a useful framework for people to anchor their expectations on. So that’s why, in a sense we would agree that it’s important to make these approaches risk based and therefore not dependent on size alone. I should add also, that our only political ideology is financial stability, for the purpose of this exercise.

  But will this be used FOR the Senator Richard Shelby draft bill?

  On remittances, Aditya Narain said it is an important question but one that the IMF is dealing with in other venues; it apparently wasn't raised to the US during this process. Why not?

 Narain told Inner City Press, "On the regulatory question, this is an issue which is being discussed in several forums where the IMF has been participating, and this is an issue not just for the US, although it has been most discussed in the context of the US, but the effects of the AML on remittances and the result, the stringent adherence to standards has led to a concern more globally that might be affecting the flow of remittances to those jurisdictions... where such remittances and the channels through which they flow are more important. We have not discussed this... there is work ongoing in the Fund, including in collaboration with other institutions like the World Bank... and we expect to be able to have more information on this in a few months time."

   In the embargoed media conference call, two questions in a row went to the Financial Times, which opined that the IMF report takes the side of the Democratic Party. The IMF disagreed. The IMF said, in writing, “As the epicenter of the global financial crisis that began in 2008, the United States passed a major law in 2010, the Dodd-Frank Act, to reform its financial system. Officials need to complete the rulemaking under the law, while parts of reform agenda face legislative proposals to water them down.”

   Central Banking asked two questions and Reuters one, on federal insurance regulation.  Watch this site.

Scoops: Sudan Ousters and Money, Of Global Fund "Interim Principal Recipient" UNDP and National Staff Members' UNFCU Dollars to Bank of Khartoum

By Matthew Russell Lee, Exclusive Follow Up

UNITED NATIONS, December 28, more here – With the UN belatedly moving to stand up to pressure from the Sudanese government of Omar al Bashir, who has ordered UN officials Yvonne Helle and Ali Al-Za'tari to leave the country, Inner City Press yesterday exclusively reported on a particularly shameful way in which the UN and Al-Za'tari tried to placate the Sudanese government, to the extend of giving it the U.S. dollars of UN national staff in Sudan.

  Now, in terms of the December 24 order to the UN Development Program's Country Director Yvonne Helle to leave about which Inner City Press first asked at the UN noon briefing on December 24, sources exclusively tell Inner City Press of UNDP's role as the "interim" Principal Recipient of funding of the Global Fund to fight AIDS, Tuberculosis and Malaria, and of a disagreement.

  In most countries, the government is the Principal Recipient. In Sudan, which as we reported yesterday made a play successfully to get the U.S. dollar deposits of UN national staff, that has not been the case. The Global Fund's webpage on the topic, Principal Recipient in Sudan, lists Ali Al-Za'tari.

   Once again, it's a case of Follow the Money.

   Last week Inner City Press exclusively reported on the UN Federal Credit Union abruptly telling UN national staff in Sudan that their accounts were being frozen and the dollars in them transferred to the Bank of Khartoum. Inner City Press has asked the UN, including UNDP, OCHA andUNFPA, to explain this. 

   On December 27 Inner City Press exclusively published a complaint filed with Ali Al-Za'tari about the change,here. Inner City Press notes that the decision to give the UN national staff's dollars to the Bank of Khartoum flies in the face, in fact, of the sanctions.  The complaint to Al-Za'tari states that 

“UNFCU closed checking and savings accounts of national staff without prior notification and consultation and unilaterally transferred all funds of staff members' accounts to local saving accounts to be paid in SDG by Bank of Khartoum... Based on the long years of established provision of the UNFCU service, majority of national staff have made long term financial arrangements taking into account UNFCU deposits facilities which provided solutions to many of their problems such as medical treatments and education to them and their families.”

  UNFCU's President and CEO William Predmore told national staff in Sudan that that “as you may be aware, UNFCU is subject to U.S. Regulations (including those promulgated by the Office of Foreign Assets Controls (OFAC)). In order to ensure compliance with those regulations, checking account services and debit card services were terminated for local staff.”

   (Many were stranded with AMT cards that didn't work, while their dollars were transferred to the Bank of Khartoum.)

  Contrary to what UNFCU's Predmore told staff in writing, the US OFAC has told UN staff that sanctions law and regulation does NOT require what the UN has done, citing 31 CFR 538.531.

  Tellingly, Predmore's letter to staff also says that the switch was made pursuant to UNDP's rules. What rules?

  Now the UN Security Council is set to meet on December 30 about Sudan's order to Ali Al-Za'tari and Yvonne Helle to leave; the Council will say they are in support of UN staff. What will they do about UN staff members' dollars having been given to the Sudanese authorities?

  In essence, UNDP and its Resident Coordinator Ali Al-Za'tari gave Khartoum the U.S. dollars of UN national staff, without notice. Even that wasn't enough to keep him in the country. But it is reminiscent of another UN scam Inner City Press exclusive uncovered, the overpayment of Myanmar by inflated foreign exchange rate in the wake of Cyclone Nargis.

  That was covered and credited – will this be? Or does thescam here extend to covering up the complicity of UN officials like not only Herve Ladsous but even, yes, Ali Al-Za'tari, who remained silent when UNFPA's country director was thrown out of Sudan in April, and as Inner City Press asked the UN on December 24, gave in quickly to the ouster of Yvonne Helle? Watch this site.

   

As UNAIDS Names Aishwarya an Envoy, of Novartis Case & India's Global Fund Loss

By Matthew Russell Lee

UNITED NATIONS, September 24 -- Just as the Clinton Global Initiative is a platform for Proctor & Gamble and even Freeport-McMoRan mining to announce partnerships with Smoky Robinson, for example, the UN General Assembly allows UN agencies to launch new public faces.

  UNAIDS on Monday "appointed global Indian icon Aishwarya Rai Bachchan as International Goodwill Ambassador." Inner City Press asked UNAIDS executive director Michel Sidibe, as before, about the scandal of the Global Funds on Aids, Malaria and Tuberculosis not funding anymore (after it "contributed the maximum of `630.44 crores in 2009-10 and `307.58 in 2010-11" in India.) Video here, from Minute 19:45.

Sidibe put a brave face on this, saying this is an opportunity for India to start funding its own programs. Yes, but that's true of all countries previously receiving Global Fund help.

Sidibe indirectly acknowledged the problem, referring to "Global Fund reforms" so it will have "credibility again."

It's rare for the UN system to admit the need for more credibility: so far, for example, no one has been held accountable for the Law and Order Trust Fund for Afghanistan scandal documented in leaked audits Inner City Press has published. 

   But even on this, Secretary General Ban Ki-moon ended up giving yet another post, AIDS envoy to Central Asia and Eastern Europe, to the man responsible for the Global Fund scandal: Michel Kazatchkine. One still wonders what Sidibe thinks of this.

  Inner City Press asked Aishwarya Rai Bachchan about the case in India in which Novartis is pursuing a patent case in such a way as would undermine the availability of generic drugs, including AIDS drugs, at lower costs. Video here, from Minute 21:54.

  Aishwarya Rai Bachchan replied that, "I'm learning so that I can step forward." Fair enough. Watch this site.

At UN, Of Global Fund & Blazy, Jim Kim, Malaria & Myanmar, Ban On the Run?

By Matthew Russell Lee

UNITED NATIONS, April 23 -- At malaria day at the UN on Monday, questions of gaps emerged and were largely dodged. Inner City Press asked Jeffrey Sachs about the resistant strains of malaria, starting along the Myanmar - Thailand border. He replied that resistant is a misnomer, it's a product of mono therapy.

  Ray Chambers promoted a company in Geneva which he says may solve this problem. But until it does? Inner City Press asked Chambers about the Global Fund scandal, and when it will be back up and running. By the beginning of next year, Chambers said. And until then?

  Gabriel Jaramillo, former Banco Santander and Sovereign Bank executive, was supposed to be at the press conference but wasn't. So Inner City Press went to a chicken lunch in the re-opened replacement Delegates' Dining Room. There, Jaramillo said he would keep his answer short, "because my chicken will get cold."

  Chambers, another finance titan, spoke up incoming World Bank chief Jim Yong Kim and even praised Philippe Douste Blazy and UNITAID, whose project to raise money with airplane tickets not only failed but was exposed as corrupt. Click here for Inner City Press' first exclusive story. So much for accountability.

  A representative of Medecins Sans Frontieres in the audience spoke up about a major increase of malaria in the Democratic Republic of Congo. (Inner City Press asked where and was promised a press release tomorrow). Note that the UN has stonewalled on its waste of funds in Walikale in Eastern DRC in the "Meece's Mills" scandal exposed by Inner City Press, here.

  The representative of the Gates Foundation, contrary it seemed to Jeff Sachs' downplaying of the resistant strains in Myanmar and Thailand, said these are a problem.

  Secretary General Ban Ki-moon, it was announced, would speak to the press about Myanmar at 5:30 pm. Then a 5:45 photo op with the Azeri Ambassador was added. Fifteen minutes for presentation and questions? Resistant, indeed. Watch this site.