Press release

Jubilee Debt Campaign welcomes US call for Ebola debt relief

UK government must support expanded post-catastrophe fund at Brisbane G20 this weekend

13 November 2014 by Jubilee Debt Campaign


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Jubilee Debt Campaign has welcomed a call by US officials for emergency debt relief from the IMF for Liberia, Sierra Leone and Guinea to help tackle the Ebola outbreak, but warned that further cancellation is needed to ensure the fight against Ebola is not undermined by debt payments.

Reuters have reported that US officials have proposed 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
cancel $100 million of Liberia, Sierra Leone and Guinea’s debt of $372 million to the IMF. [1] The debt to the IMF is just a small portion of the three countries’ total foreign debt of $3,600 million. They are spending a combined $100 million on debt payments to all their lenders in 2014, rising to $130 million in 2015, of which 25% is to the IMF. [2] Since the Ebola outbreak began, a further $128 million of lending has been announced by the IMF to the three countries, further adding to their debt burden.

The US proposal is for the IMF to compensate itself for cancelling the debt through the Post-Catastrophe Debt Relief Trust, set up after the Haitian earthquake of 2010. However, in addition to this fund, the IMF also has made $8.8 billion of profit Profit The positive gain yielded from a company’s activity. Net profit is profit after tax. Distributable profit is the part of the net profit which can be distributed to the shareholders. over the last 3 years, which is sitting unspent in its reserves. [3]

Sarah-Jayne Clifton, Director of the Jubilee Debt Campaign, said:
“Countries at the frontline of the Ebola crisis are losing millions of dollars in debt payments while their healthcare systems are close to collapse.. Debt cancellation is a fast and effective way to free up resources for governments fighting this terrible disease, and recognition of this by the US is a welcome step which 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). must support it this weekend. But the G20 needs to go further. All IMF debt should be covered, as should those to other lenders like 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.

. And once the immediate crisis is averted these lenders must take responsibility for the devastating impact their 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/
programmes have had the state of healthcare systems in west Africa and the capacity of governments to tackle this crisis.” [4]

For more information and interviews contact Tim Jones on +44 (0)7817 628196



The Jubilee Debt Campaign is part of a global movement demanding freedom from the slavery of unjust debts and a new financial system that puts people first.

Footnotes

[1U.S. urges IMF to cancel debt of Ebola-stricken countries, http://www.reuters.com/article/2014/11/11/us-health-ebola-usa-debt-idUSKCN0IV28L20141111

[2Figures on the three countries debt and current debt payments are from recent Debt Sustainability Impact Assessments by the IMF and World Bank. Reuters state that $55 million of the three countries debt payments over the next two years are to the IMF.

[3Financial Statements of the IMF (Various) http://www.imf.org/external/pubs/ft/quart/index.htm

[4West Africa’s Financial Immune Deficiency, Foreign Policy magazine, 30 October 2014, http://www.foreignpolicy.com/articles/2014/10/30/west_africas_financial_immune_deficiency_ebola_imf

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