• Keep environmental laws and codes out of loan discussions.

Environmental NGOs’ major concern regarding IMF lending includes the IMF’s emphasis on creating favorable conditions for private sector development and foreign investment by weakening environmental laws. The IMF should refrain from discussing laws related to natural resources, as they are outside its area of expertise. Governments, however, should be encouraged in national economic fora and debates to publicize any changes to environmental laws, including streamlining, eliminating, or even strengthening those laws. In particular, changes to laws that deal with major extractive sectors such as mining, forestry, and fishing should be publicly disclosed.

• Pursue environmental accounting as part of IMF technical assistance and data gathering.

The IMF gathers data on the macroeconomic health of its 182 member countries, focusing on information like a country’s gross domestic product. But such measures of economic growth assume that natural resources are infinite and therefore fail to capture the economic costs of natural resource extraction. The IMF already houses a global statistics department and is in charge of providing technical assistance on national income accounting systems for finance ministries in developing countries. It should, therefore, take the lead in implementing “green” accounting systems that factor in the costs of resource extraction.

• Implement green taxes.

As part of its fiscal policy advice, the IMF focuses on building governments’ capacity to collect taxes, generally through a value-added tax (VAT) system. Rather than focusing on regressive tax policies, the IMF could encourage the generation of substantial taxes from large industrial producers and resource extractors to influence economic activity in favor of the environment. Taxes could be used as a mechanism for countries to promote environmental goals by providing incentives for manufacturers to change production practices. They could also improve a country’s economic competitiveness by encouraging more efficient energy and resource use and preventing environmental contamination and degradation.

• Establish an independent evaluation unit to assess IMF policies and programs, and improve IMF accountability.

The IMF has no permanent, independent evaluation unit that can systematically assess the impact and appropriateness of IMF policies and programs. This lack of accountability means that poor policy advice can remain hidden, and lessons can go unlearned. The IMF and its shareholders should establish a permanent, independent unit that can determine its own terms of reference, has a secure budget, and can commission outside experts. This would go a long way toward improving the impact assessment of IMF policies and programs, including potential environmental impacts.

• The World Bank must do its part.

A recent desk review of the World Bank’s sectoral and structural adjustment lending found that environmental concerns were raised in less than 20 percent of the projects examined. This appallingly low figure demonstrates that the World Bank is not doing its part to integrate its broader expertise into the adjustment design. While the IMF claims that it relies on the World Bank to address environmental concerns in its structural adjustment loans, the World Bank’s own study confirms that such reliance is misguided. The World Bank must extend its environmental safeguard and assessment policies to structural adjustment lending.