Committee for the Abolition of Illegitimate Debt

1. Since their establishment in 1944, 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 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 have consistently supported dictatorships and corrupt regimes aligned with the United States.
2. The World Bank and the IMF undermine state sovereignty, egregiously violating the right of peoples to self-determination, particularly through the conditionalities they impose.
3. These conditionalities lead to the impoverishment of populations, exacerbate inequalities, transfer control of countries to transnational corporations, and alter national legislation (including a complete overhaul of labour, mining, and forestry codes, and the abrogation of collective bargaining agreements, among other changes) in favour of creditors and foreign “investors.”
4. Despite identifying significant misappropriations of funds, the World Bank and IMF have continued to maintain and even increase the loans granted to corrupt and dictatorial regimes aligned with Western powers.
5. They have backed the most repressive dictatorships until their downfall. For example, emblematic cases include their support for Suharto in Indonesia from 1965 to 1998 and Marcos in the Philippines from 1972 to 1986, as well as Ben Ali in Tunisia and Mubarak in Egypt until their overthrow in 2011.
6. They have actively undermined progressive democratic initiatives. Here are some examples: Jacobo Árbenz in Guatemala in 1954; Mohammad Mossadegh in Iran during the early 1950s; Soekarno in Indonesia and João Goulart in Brazil in the early 1960s; the Sandinistas in Nicaragua during the 1980s; and, of course, Salvador Allende in Chile from 1970 to 1973. The list continues beyond these examples.
7. The Bank and the IMF provide financing to dictators, subsequently demanding that their victims repay the odious debts contracted by their oppressors.
8. The issue of colonial odious debt Odious Debt According to the doctrine, for a debt to be odious it must meet two conditions:
   1) It must have been contracted against the interests of the Nation, or against the interests of the People, or against the interests of the State.
   2) Creditors cannot prove they they were unaware of how the borrowed money would be used.
   
   We must underline that according to the doctrine of odious debt, the nature of the borrowing regime or government does not signify, since what matters is what the debt is used for. If a democratic government gets into debt against the interests of its population, the contracted debt can be called odious if it also meets the second condition. Consequently, contrary to a misleading version of the doctrine, odious debt is not only about dictatorial regimes.
   
   (See Éric Toussaint, The Doctrine of Odious Debt : from Alexander Sack to the CADTM).
   
   The father of the odious debt doctrine, Alexander Nahum Sack, clearly says that odious debts can be contracted by any regular government. Sack considers that a debt that is regularly incurred by a regular government can be branded as odious if the two above-mentioned conditions are met.
   He adds, “once these two points are established, the burden of proof that the funds were used for the general or special needs of the State and were not of an odious character, would be upon the creditors.”
   
   Sack defines a regular government as follows: “By a regular government is to be understood the supreme power that effectively exists within the limits of a given territory. Whether that government be monarchical (absolute or limited) or republican; whether it functions by “the grace of God” or “the will of the people”; whether it express “the will of the people” or not, of all the people or only of some; whether it be legally established or not, etc., none of that is relevant to the problem we are concerned with.”
   
   So clearly for Sack, all regular governments, whether despotic or democratic, in one guise or another, can incur odious debts. is a significant concern. Similarly, the Bank has compelled the populations of countries that achieved independence in the late 1950s and early 1960s to repay odious debts that were incurred by former colonial powers for the purposes of colonisation. A notable example is the colonial debt that Belgium and the World Bank incurred to facilitate the colonisation of Congo (Kinshasa) during the 1950s. This occurs despite the fact that such transfers of colonial debts are prohibited by international law.
9. In the 1960s, the Bank and the IMF provided financial support to countries such as South Africa, which was under apartheid, and Portugal, which was maintaining its dominance over colonies in Africa and the Pacific, despite these nations being subject to an international financial boycott imposed by the UN. The World Bank also offered support to Indonesia, which had forcibly annexed East Timor in 1975.
10. On the ecological front, the Bank continues to pursue productivist and extractivist policies that are disastrous for populations and harmful to nature. It still supports the construction of coal-fired power plants, which have severe implications for pollution and climate change. Furthermore, it has managed to take charge of the market for pollution permits. The World Bank also finances the construction of large dams, which inflict significant environmental damage. The Bank encourages the expansion of agribusiness at the expense of family farming, endorsing the extensive use of pesticides, herbicides, and chemical fertilisers that contribute to the alarming loss of biodiversity and degradation of soil quality. Additionally, the World Bank promotes the privatisation and commercialisation of land, which benefits large landowners. The president of the World Bank is currently attempting to persuade the board to fund the development of nuclear power plants.
11. The World Bank and the IMF finance projects that blatantly violate human rights. One of the projects that least respects human rights and was directly supported by the Bank is the ‘transmigration’ project in Indonesia during the 1970s and 1980s. Several aspects of this project, such as the destruction of the natural environment of indigenous populations and the forced displacement of communities, could be classified as crimes against humanity.
12. The World Bank and the IMF contributed to the emergence of factors that precipitated several debt crises. In summary: a) the World Bank and IMF encouraged countries to incur debts under conditions that ultimately led to overindebtedness; b) they drove, and at times compelled, countries to eliminate capital movement and exchange controls, which increased capital volatility and significantly facilitated its flight; c) they urged countries to abandon import substitution industrialisation in favour of a model centred on export promotion.
13. When a debt crisis occurs, the World Bank and the IMF systematically prioritise the interests of creditors, mostly at the expense of debtors.
14. The World Bank and the IMF have recommended and even imposed policies that shift the burden of debt to the general populace while favouring the most powerful.
15. The World Bank and the IMF have perpetuated the ‘generalisation’ of an economic model that systematically exacerbates inequality both between and within countries.
16. The World Bank and the IMF, in collusion with the governments of the indebted nations, have implemented 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 across the majority of Latin America, Africa, Asia, and Central and Eastern Europe.
17. The countries mentioned have undertaken extensive privatisations that have harmed the common good, resulting in significant wealth accumulation for a small group of oligarchs.
18. The World Bank and the IMF have bolstered large private corporations while undermining both governing authorities and small producers. This has exacerbated the exploitation of workers and small producers, increasing their vulnerability and precariousness.
19. Their self-proclaimed fight against poverty fails to conceal a policy that in practice reproduces and aggravates the very causes of poverty.
20. The World Bank’s rhetoric regarding “gender equity Equity The capital put into an enterprise by the shareholders. Not to be confused with ’hard capital’ or ’unsecured debt’. ” aligns in practice with policies that, in reality, reinforce certain elements of patriarchal dominance. The policies financed by the Bank and the IMF adversely affect women’s lives.
21. The liberalisation of capital flows, which has been systematically encouraged, has led to a rise in tax evasion, capital flight, and corruption.
22. The liberalisation of trade has reinforced the strongest economies while further diminishing the weaker ones. Most small and medium-sized producers in developing countries struggle to compete against large corporations, whether from the North or the South.
23. The World Bank and the IMF, who advocate for good governance in numerous reports, are known to engage in questionable practices within their own institutions.
24. The World Bank and the IMF have systematically undermined public health services. Their actions have significantly weakened the ability of public authorities and individuals to combat traditional diseases such as malaria and tuberculosis, as well as emerging epidemics like Covid-19.
25. The neoliberal policies increase pressure on the working classes to seek employment abroad in order to send financial aid back to their families at home. Additionally, there is a brain drain.
26. This labour export generates more foreign exchange earnings than other exports. Remittance flows from migrant workers surpass development aid flows (ODA ODA
    Official Development Assistance Official Development Assistance is the name given to loans granted in financially favourable conditions by the public bodies of the industrialized countries. A loan has only to be agreed at a lower rate of interest than going market rates (a concessionary loan) to be considered as aid, even if it is then repaid to the last cent by the borrowing country. Tied bilateral loans (which oblige the borrowing country to buy products or services from the lending country) and debt cancellation are also counted as part of ODA. Apart from food aid, there are three main ways of using these funds: rural development, infrastructures and non-project aid (financing budget deficits or the balance of payments). The latter increases continually. This aid is made “conditional” upon reduction of the public deficit, privatization, environmental “good behaviour”, care of the very poor, democratization, etc. These conditions are laid down by the main governments of the North, the World Bank and the IMF. The aid goes through three channels: multilateral aid, bilateral aid and the NGOs. ). In 2024, the total amount of remittances (money transfers from migrants) to low- and middle-income countries is estimated to exceed 656 billion USD, according to World Bank data. Total ODA, which predominantly consists of loans with only a small minority as grants, amounted to just under 200 billion USD. This figure includes ODA to Ukraine, which is not classified as a developing country. In the case of the Philippines, remittances from migrants reached 39 billion USD in 2024, while ODA donations barely exceeded 2 billion USD.
27. Some governments actively promote the export of labour. In the Gulf States and in the economies of industrialised nations, these migrants are often subject to overexploitation and are deprived of their political, economic, social, and cultural rights.
28. The two institutions marginalise most developing countries, despite them representing the majority of their members, thereby favouring a select few governments in wealthy nations.
29. In summary, the World Bank and the IMF serve as despotic instruments wielded by an international oligarchy, comprising a small number of dominant powers, their governments, and their transnational corporations. This oligarchy reinforces an international capitalist system that is harmful to both humanity and the environment.
30. The detrimental practices and activities of the World Bank and the IMF must be revealed and condemned to ensure they come to an end. The debts demanded for repayment by these institutions should be cancelled, and both the institutions and their directors must face accountability.

Conclusion
It is urgent that a new, democratic international architecture be set up, one that would promote the redistribution of wealth and support the efforts of people to achieve a form of development that is socially just and respectful of nature.

According to CADTM, it is impossible to reform the World Bank and the IMF. These two institutions must be dissolved and replaced by democratic international institutions. The organisation replacing the World Bank should be highly regionalised (banks of the South could be connected with it), and its function would be to provide loans at very low or zero 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. and aid, which would not be granted unless they were used in strict accordance with social and environmental standards and, more generally, fundamental human rights. Unlike the existing World Bank, the new bank the world so desperately needs would not attempt to represent the interests of creditors while forcing debtors into submission to the all-powerful market; its priority mission would be to defend the interests of the people who receive loans and grants and whose labour repays them.

Regarding the new IMF, it should revert to part of its original mandate, which includes guaranteeing currency stability, combating speculation, controlling capital movements, and prohibiting tax havens and tax evasion. To attain this goal, it could contribute – along with national authorities and regional monetary funds that also need to be created – to collecting various international taxes.