Committee for the Abolition of Illegitimate Debt

WASHINGTON - Jubilee USA Network, the US arm of the global movement for debt cancellation in impoverished countries, released the following statement today:

“As Indonesia struggles to rebuild after this weekend’s devastating earthquake - striking less than two years after the 2004 tsunami - world leaders must move quickly to cancel Indonesia’s onerous debt burden. While donors pledge emergency assistance in the form of more loans to Indonesia, the country would be better served through full debt cancellation.

This weekend’s earthquake comes amid existing conditions of persistent poverty in the country. Indonesia has been slowly recovering from both the 2004 tsunami and the 1997 Asian financial crisis, while emerging from the 32-year rule of dictator Suharto. Much of Indonesia’s debt was contracted under Suharto and can be classified as ‘odious’ and illegitimate. In US Senate testimony, Northwestern University professor Jeffrey Winters found that at least one-third of 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.

loans to Suharto were stolen by his regime.

At $134 billion, Indonesia’s debt is unpayable. Almost twenty percent of Indonesia’s population is classified as poor, with the unemployment rate also around twenty percent. Yet in 2004, Indonesia spent 10 times more on debt service Debt service The sum of the interests and the amortization of the capital borrowed. than it did on healthcare. The government spends about $2.5 million per day on 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. payments alone, with debt service accounting for almost a third of the government’s budget. Currently, only around $500 million in the country’s budget is set aside for emergencies such as the recent earthquake.

Jubilee USA joins with Indonesian civil society partners to call on the Paris Club Paris Club This group of lender States was founded in 1956 and specializes in dealing with non-payment by developing countries.

group of creditors along with the International Monetary Fund 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 , World Bank, and other Northern creditors to cancel Indonesia’s odious and illegitimate debt. The combination of persistent and wide-spread poverty in Indonesia - exacerbated by the earthquake - and the odious nature of Suharto-era debt provide a compelling argument for the 100% cancellation of Indonesia’s debt. Such cancellation must come immediately and without harmful economic conditions attached."

Jubilee USA Network is the US arm of the international movement working for debt cancellation for impoverished nations. Jubilee USA is a network of 75 religious denominations and faith-based groups, labor groups, environmental organizations, and community and advocacy groups working for freedom from debt and economic justice for countries in Africa, Asia, and Latin America.