The experiences in these eight countries show that the IMF’s narrow approach to stabilization and structural adjustment policies can negatively impact the environment. Natural resources are scarce, and their full ecological, social, cultural, and economic values need to be recognized. The current model of economic development that is being pursued by the IMF (and other international financial institutions) is fundamentally unsustainable, as it seeks growth at all costs without regard to ecological limits. The IMF alone is not responsible for the environmental problems in these eight countries, but its policies and conditions have exacerbated the situation. The IMF and its member governments need to take immediate steps to reverse the negative ecological impact of these economic policies. Further, the IMF has a particular niche to fill in promoting environmentally sustainable development, since it assists countries in measuring GDP, setting tax policies, and setting the overall budgetary level. These steps include the following recommendations.

• Refocus the IMF on its original mandate of short-term stabilization, leaving longer-term economic adjustment to other institutions.

Through its structural adjustment programs, the IMF currently is involved in setting policy in a wide range of areas that have major environmental impacts, yet the IMF has no capacity to address the implications of these policies. By focusing on its core stabilization mandate, the IMF would let more appropriate institutions with more staff capacity focus on longer-term structural issues, increasing the likelihood that environmental implications will be more appropriately handled. The IMF would then be more capable of working with other institutions to assess the environmental implications of a narrower set of macroeconomic issues.

• Commission Environmental Impact Assessments as part of a SAP agreement.

Determining the environmental impacts of a particular macroeconomic policy may be more complicated than doing a similar analysis for an individual project. Yet as long as the IMF continues its structural adjustment lending, rather than refocusing on short-term stabilization, it is imperative that the IMF incorporate environmental impact assessments (EIAs) into its loans. Only a full assessment of a policy’s environmental impacts will allow the IMF to pursue policies promoting countries’ long-term economic prosperity. The IMF should commission institutions with appropriate staff experience and expertise with environmental issues and EIAs to conduct the studies and incorporate the results into its loan programs.

• Include environmental ministers in negotiations on IMF programs, and increase consultation with environmental organizations and civil society generally.

Negotiations over the elements of an IMF loan program are often done solely between the IMF and a country’s finance ministry and central bank. The lack of broader government participation is a serious impediment to creating programs for viable economic growth. In countries where natural resources generate a significant portion of national income, it is particularly important for environmental ministries to be represented in loan negotiations so that sustainability and resource management issues enter into the economic discussions. The IMF should also increase its outreach to and dialogue with environmental organizations, as well as the full range of civil society groups. The proposed Poverty Reduction Strategy Paper process, which envisions a national consultation between the IMF, World Bank, government, and civil society, is a step toward this increased dialogue. However, the IMF should make greater efforts to meet with and listen to the experience and knowledge of organizations that have firsthand knowledge of a country’s environmental situation, and who are often well-placed to identify the potential negative environmental impacts of IMF loans.

• Encourage the protection of environmental programs by publishing environmental spending figures in a clear, disaggregated manner.

An outcome of the increased debate between policy makers and civil society surrounding debt relief for impoverished countries is a new emphasis on budget transparency and civil society participation in budgetary decision making. In its work to promote budgetary transparency with governments, the IMF should work to make publicly available budget information on environmental spending so that citizens can track an increase or decrease in spending on environmental programs.