The 2007 annual meetings of the World Bank and the IMF in Washington will be the first occasion that the new heads of the IMF and the World Bank have met collectively with their shareholders. Both organisations are facing a crisis of bankruptcy and irrelevance. The crisis reflects a widespread feeling among developing country members that the organisations continue to operate as extensions of western foreign policy; and that they continue to promote a core set of microeconomic policy prescriptions that have not been shown to work in practice.

As is well known, a consensus emerged over the 1980s in much of Latin America and in the multilateral development organisations headquartered in Washington. Dubbed the ”Washington Consensus”, it contained two central prescriptions: one, maintain a secure and stable macroeconomic regime by keeping the exchange rate competitive, the budget deficit low, the tax base broad; and two, improve markets by quickly liberalising foreign trade, abolishing restrictions on inward foreign direct investment, eliminating preferential interest rates, privatising public enterprises, and protecting private property.