Committee for the Abolition of Illegitimate Debt

The annual meetings of the IMF IMF
International Monetary Fund Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org and of the World Bank World Bank
WB The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

in Istanbul ended in a climate of repression. For the second consecutive day, the 10,000 policemen who had been called upon for the occasion used water cannons, tear gas and tanks against demonstrators. The same scenario had been played out at the G20 G20 The Group of Twenty (G20 or G-20) is a group made up of nineteen countries and the European Union whose ministers, central-bank directors and heads of state meet regularly. It was created in 1999 after the series of financial crises in the 1990s. Its aim is to encourage international consultation on the principle of broadening dialogue in keeping with the growing economic importance of a certain number of countries. Its members are Argentina, Australia, Brazil, Canada, China, France, Germany, Italy, India, Indonesia, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, USA, UK and the European Union (represented by the presidents of the Council and of the European Central Bank). summit in Pittsburgh, where demonstrations against this G8 G8 Group composed of the most powerful countries of the planet: Canada, France, Germany, Italy, Japan, the UK and the USA, with Russia a full member since June 2002. Their heads of state meet annually, usually in June or July. substitute were also violently repressed by police forces. The IMF and the WB held these controversial meetings only days after the G20’s decision to change the voting rights within these two institutions: 5% of the IMF quotas and 3% of the voting rights at the WB assembly are to be transferred to emerging and developing countries by January 2011. The current voting system was challenged both by countries of the South and by social movements: it relies on the “1 dollar = one vote” rule, contrary to the UN General Assembly where each country has only one vote.

For the IMF’s Managing Director, the French socialist Dominique Strauss-Kahn, these are “historic decisions”. Yet for CADTM, this is but a grim joke. Indeed, this modification does not change the power relationships within the two institutions at all. For instance, China, one of the main beneficiaries of the change, now has about 3% of the voting rights, far behind the United States, which holds over 16%, giving it de facto veto power on all major decisions. The Rwanda group, representing 24 Subsaharan African countries and some 225 million people, holds 1.39 % of the voting rights! No need to be a keen mathematician to understand that these media-hyped pseudo-reforms will not turn the IMF and the WB into democratic organisations. Can they ever become democratic considering that the present system cannot be changed without the US’s consent? To make things worse, since 1944, according to a tacit agreement, the WB’s President has always been a US citizen while the director of the IMF has always been a European. Such power-sharing combined with a deeply antidemocratic allocation of voting rights is evidence that the IMF and the WB are tools in the hands of Western powers in order to impose self-serving policies upon the rest of the world.

After a severe crisis of legitimacy the WB and the IMF have been given a new lease of life thanks to the global crisis. From 2004 to 2008, a significant rise in commodity prices increased the currency reserves of some developing countries, which could then repay their debts to these creditors in advance and thus shake off their cumbersome guardianship. But since the end of 2008, the global crisis has radically changed the situation. The list of badly hit countries keeps getting longer and the G20 has restored the IMF and the WB as key actors in the global game. Romania yielded to IMF pressure and implemented anti-welfare policies such as a 15% cut in civil servants’ incomes, in order to receive a loan to deal with short-term emergencies. The same has occurred in about fifteen countries since 2008. The World Bank has benefited from the environment crisis by setting set up several climate investment funds Investment fund
Investment funds Private equity investment funds (sometimes called ’mutual funds’ seek to invest in companies according to certain criteria; of which they most often are specialized: capital-risk, capital development funds, leveraged buy-out (LBO), which reflect the different levels of the company’s maturity. , though it continues to finance deforestation and mining projects. Over the course of 2008, funds for clean energy were five times lower than those dedicated to non-renewable energy, the amount of which rose by over 165%. [1.]

Next, the G20, a self-proclaimed global regulation authority, played a decisive part in the attempt to restore the IMF’s legitimacy as it trebled the resources made available to this institution at the London summit last April and enlarged its missions as an outcome of the Pittsburgh summit. The IMF has thus been placed at the heart of efforts to monitor the global economy “to promote international financial stability and to strengthen economic growth”. At the Istanbul summit it was decided to “reassess the IMF’s mandate to include all macroeconomic policies and policies related to the financial industry that influence global economic stability.” It will thus have to “recommend economic policies to countries, which will have to take adapted corrective measures”. It’s easy to guess what the IMF’s recommendations will be. In June 2009 the IMF commented on policies implemented in the Euro zone: “measures taken to support shorter working hours and raise social benefits—while important to shore up incomes and keep the labour force attached to the labour market—should have built-in reversibility” [2.]
The WB report “Doing Business 2010” is even more explicit since it warns countries against social protection programmes and calls governments that develop them ‘anti-competitive’ [3.]
In spite of its repeated failures, the Washington Consensus, a kind of code for neoliberalism, still is the IMF’s and the WB’s tall order to countries that ask for their ’help’.

Yet the failure of structural adjustment Structural Adjustment Economic policies imposed by the IMF in exchange of new loans or the rescheduling of old loans.

Structural Adjustments policies were enforced in the early 1980 to qualify countries for new loans or for debt rescheduling by the IMF and the World Bank. The requested kind of adjustment aims at ensuring that the country can again service its external debt. Structural adjustment usually combines the following elements : devaluation of the national currency (in order to bring down the prices of exported goods and attract strong currencies), rise in interest rates (in order to attract international capital), reduction of public expenditure (’streamlining’ of public services staff, reduction of budgets devoted to education and the health sector, etc.), massive privatisations, reduction of public subsidies to some companies or products, freezing of salaries (to avoid inflation as a consequence of deflation). These SAPs have not only substantially contributed to higher and higher levels of indebtedness in the affected countries ; they have simultaneously led to higher prices (because of a high VAT rate and of the free market prices) and to a dramatic fall in the income of local populations (as a consequence of rising unemployment and of the dismantling of public services, among other factors).

IMF : http://www.worldbank.org/ policies implemented in countries of the South since the 1982 debt crisis should have been sufficient to censure them: poverty and inequalities have grown while the issue of debt is anything but solved. Worse still, a new crisis of debt is brewing, which will increase the proportion of national budgets dedicated to repaying creditors. This will happen unless governments decide to suspend payment so as to meet fundamental human needs and to launch a large-scale audit of their debts in order to unconditionally cancel the illegitimate portion of them, which did not benefit the people. An audit of this kind would be a first and crucial challenge to the grizzly policies enforced by the IMF and the WB. We must now demand that they be replaced by institutions that truly care for the people’s interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. .