Committee for the Abolition of Illegitimate Debt

The report:

1. presents the incidence of budget cuts based on 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 projections in 189 countries until 2025;
2. reviews 267 IMF country reports to identify the main austerity measures being considered by Ministries of Finance and the IMF in each country; and
3. presents alternative financing options, calling on governments to end austerity by creating fiscal space to finance progress toward human rights and the UN Sustainable Development Goals (SDGs). 

Analysis of IMF expenditure projections shows that 143 countries - including 94 developing nations - are implementing policy measures that undermine the capacity of governments to provide education, healthcare, social protection and other public services. Governments started scaling back public spending in 2021, and the number of countries slashing budgets is expected to rise through 2025. A long list of austerity measures is being considered or already implemented by governments worldwide: targeting and rationalizing social protection (in 120 countries); cutting or capping the public sector wage bill (in 91 countries); eliminating subsidies (in 80 countries); privatizing public services/reform of State-Owned Enterprises (SOEs) (in 79 countries); pension reforms (in 74 countries); labor flexibilization reforms (in 60 countries); reducing employers’ social security contributions (or “tax wedge,” in 47 countries); and cutting health expenditures (in at least 16 countries). In parallel, three prevalent measures to raise revenues in the short-term that also have detrimental social impacts include: increasing consumption taxes, such as sales and value-added taxes (VAT) generally regressive (in 86 countries); strengthening public-private partnerships (PPPs) (in 55 countries); and increasing fees/tariffs for public services (in 28 countries). These austerity policies have negative social impacts on their populations, especially harming women, and must be avoided by policy-makers. 

It is alarming that trillions of dollars are used to support corporations, while the costs of adjustment are thrust upon populations. Governments should work to bring prosperity and welfare for all. The dangers of overly-aggressive austerity are clear from the past decade of adjustment. From 2010-19, billions of lives were upended by reduced pensions and social protection benefits, cuts to programs for women, children, the elderly, persons with disabilities, informal workers, ethnic minorities; by lesser and lower paid teachers, health and local civil servants; less employment security for workers, as labor regulations were dismantled; by lower subsidies and higher prices due to consumption taxes, which further reduced disposable income following the significant job losses caused by lesser economic activity.

Austerity cuts are not inevitable, there are alternatives. There is no need for populations to endure adjustment cuts: instead of cutting public expenditures, governments can increase revenues to finance universal social protection and quality public services in accordance with human rights and the SDGs.

There are at least nine financing alternatives, available even in the poorest countries. These nine fiscal space financing options are supported by policy statements of the UN and the international financial institutions, and have been implemented by governments around the world for years. These include:

1. increasing progressive tax revenues, including taxing wealth
2. eliminating/restructuring debt,
3. eradicating illicit financial flows,
4. increasing social security contributions and coverage, including adequate employers contributions and formalizing workers in the informal economy with decent contracts,
5. using fiscal and foreign exchange reserves,
6. re-allocating public expenditures (e.g. less military spending),
7. adopting a more accommodating macroeconomic framework,
8. lobbying for 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. and transfers, and
9. new Special Drawing Rights (SDRs) allocations without conditionalities.

There is a global campaign to stop austerity measures: #ENDAUSTERITY. Join here: https://endausterity.org/

Click here to download the report

Click here to watch the launch of this report and the launch of the End Austerity Campaign, with Sharan Burrow, Jayati Ghosh, Cephas Lumina, Roberto Bissio, J.P. Bohoslavsky, Isabel Ortiz and others.