Committee for the Abolition of Illegitimate Debt

Forbes magazine has just published its annual list of the world’s richest individuals, and CADTM cannot remain silent in the face of the out-and-out scandal that lies behind these figures.

According to Forbes, there are currently 946 billionaires (in dollars) in the world, as against 793 last year, thus demonstrating once again that the very rich keep getting richer. The cumulative fortune of these 946 billionaires amounts to some 3,500 billion dollars.

By comparison, the external public debt of all the developing countries is a modest one at just 1,500 billion dollars. Yet this debt, which is largely odious in nature, and which has not benefited the populations concerned, is a colossal burden for the economies of these countries. Each year, the respective authorities pay out over 200 billion dollars in debt servicing.

For CADTM, the present economic model is incapable of taking into account the common good and of providing a solution to the poverty and corruption that is strangling whole sections of the planet. 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 , 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.

, the leaders of the most industrialized countries, and the big multinationals are defending a structurally iniquitous system bent on constantly increasing the profits of a few, with the active connivence of the elite of countries in the South.

CADTM calls for wide-sweeping change so that the interests of the many are not constantly being thrust into the background by the private interests of a handful of very rich individuals. CADTM calls for the application of four measures designed to open up a radically different path:

- total and immediate cancellation of the external public debt of all developing countries and an audit in each country identifying the different responsibilities in the current situation;

- an end to 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 (liberalization, privatizations, cuts in social spending) which the major powers are able to enforce thanks to the debt mechanism;

- the removal of tax havens and expropriation of the funds concealed there;

- finally, an exceptional 50% tax to be levied on the fortunes of the 946 billionaires listed by Forbes and to be used in the fight against poverty.