Committee for the Abolition of Illegitimate Debt

Everything in life seems to have its own time. Who could imagine a representative of the Zambian business community criticising the policies of 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 (IMF), 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 other multilateral institutions?

For many years, our Zambian business community was in support of the policies and programmes of the IMF. They were in the forefront urging government to meet the conditionalities of the IMF. There is no policy or programme of the IMF that they openly criticised. They supported all IMF policies and programmes, including privatisation. There are reasons for this. Firstly, some of them were misled into believing their businesses would benefit from these policies and programmes. They never thought these programmes would affect them in the same way they were affecting the workers and the poor. They thought it would be easy for them to do business with the transnational corporations.

Some of them thought they would appointed agents of transnational corporations or would be made to serve on their boards and receive huge sitting allowances. This has not happened. Very few of our business people have benefited from dealings with transnational corporations. It is not only the worker who has been affected by the IMF policies and programmes, the businessman is now also feeling it. If the worker is not happy and the businessman is not happy, then who is benefiting from the IMF policies and programmes? Where does the success of these programmes lie if not with the business people and the workers?

The truth is these policies are a failure and its time our business people and our workers - together with our government - started working on alternative policies and programmes. However, this is not easy because the conditionalities we are subjected to by the IMF don’t allow it. We have to follow their prescriptions or face blackmail. Not following IMF conditionalities means no access to finance even from bilateral donors. We have to get an IMF clearance before anyone can deal with us. What this means is that our government cannot take independent initiatives to develop our economy. We have to do what the IMF wants. However, when we attempt to resist, we are told we can do what we want as a free nation but we have to take into account the consequences of our decisions. We are told to manage our affairs prudently. But when one analyses what this means, it boils down to the reality that to act prudently means to follow the IMF conditionalities to the letter.

We are also told that these conditionalities are not an imposition on our country; they are a product of negotiations. But really, what can a government like ours which they have weakened and undermined so much negotiate with the IMF? The negotiating conditions are not equal, there is no level playing field.

In the end, the IMF invariably gets its way. There is no democracy in the way the IMF deals with us. In fact, it is impossible for a government to follow the IMF policies and programmes and remain democratic. This is because for a government to implement IMF policies and programmes, it has to stop listening to the wishes and cries of its people; the government has to be prepared to use its repressive agencies against the people all the time as they attempt to challenge these policies.

Our people, including the business community and indeed even our own government, have no real or meaningful input into these policies and programmes. Out of embarrassment, it is not unusual to hear our political leaders claiming ownership of these policies and programmes.

Former president Frederick Chiluba even used to claim that he worshipped these policies in the morning, noon and evening. It will be impossible for our country to make any meaningful progress if the economic destiny of our country is left in the hands of IMF bureaucrats. It cannot be denied that the IMF and the World Bank employ highly educated people. But these are people without political or social responsibility, people who have not been elected by anyone and who owe no one other than their employers any obligation.

And moreover, these are people who have never run anything - most of them not even a village or a tea-room. They owe everything to the gigantic salaries they receive from these institutions. Some of them even know that the policies they are made to impose on our countries are not doing any good but causing a lot of damage and untold suffering to our people. But like Judas Iscariot, few of them have demonstrated conscience. Yes, we have a few of them who have denounced the policies and programmes of these institutions after leaving their employment.

And as Basinati Mpepo has correctly observed, our government is more accountable to the IMF and World Bank than to us. What the IMF and World Bank ask of them, they have carried out even if the great majority of our people are opposed to it. An example of this is the privatisation of Zambia National Commercial Bank. The IMF and World Bank have been insistent on the privatisation of this bank as part of their conditionalities. The people of Zambia have been strongly opposed to this privatisation. Even our members of parliament voted overwhelmingly against the privatisation of this bank. Even our country’s President - Levy Mwanawasa - is on record opposing the privatisation of this bank. But money speaks and the IMF is carrying the day; its will has to be done - Zambia National Commercial Bank is up for privatisation. Where is democracy in this? Where is self rule in all this? Who are the ultimate decision makers in our country? The answer is a categorical: IMF and World Bank.

But without shame representatives of the IMF and World Bank come here and preach good governance and democracy to us and our leaders. What democracy are these gentlemen talking about when they can subject an entire nation and its leaders to such humiliation? What economic decisions have they left for us and our leaders to make when almost every key decision is made by them - directly or indirectly?

It’s good our people in business and civil society in general are starting to wake up to the reality of living under the bondage of the IMF and World Bank imperialism and are starting to resent it. Slowly but surely, our people are starting to develop consciousness on our relations with the World Bank and the IMF. Soon they will start to devise policies and programmes of how to resist and fight this subjugation and start to take effective control of the economic destiny of our country. This is inevitable. We have no choice but to struggle if we have to harbour any hope for survival and take full control of the economic destiny of our country.

However, this calls for unity among our people - the business people and their organisations, the workers and their unions, civil society organisations and our politicians need to come together.