Committee for the Abolition of Illegitimate Debt

A malnourished child at an aid centre in Maradi, Niger, during a drought in 2005. Photograph: EPA

Christine Lagarde’s crass comments on Greece have caused an understandable furore in that country. But in Niger, there must be just as much contempt for 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 director. For in dismissing the plight of mothers in Greece, Lagarde also said she felt more sympathy for ’the little kids from a school in a little village in Niger’.

If ’sympathy’ is what characterises the IMF’s approach to Niger, then Greece would do better to avoid it. Niger comes into news headlines on a fairly regular basis – associated as it is with cycles of famine and constantly high levels of malnutrition. Less reported is the role of the IMF, along with sister organisation 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.

, in fuelling this suffering.

Niger was a victim of the IMF’s now infamous 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/ Programme from 1982 and remains under an IMF programme to this day. As in Greece, the IMF loaned money to Niger to bail out Niger’s creditors. Nothing was said as to how valid this debt was, an important question because it was under the military governments from 1974 that loans really started flowing.

Loans repaid debt and, as in Europe today, the ordinary people of Niger had to pay the price for reckless lending through austerity and a series of economic reforms. We get an indication of the impact of these policies by looking at agriculture.

Most people in Niger live off the land. The IMF and World Bank prioritise exporting as a vital means of earning foreign currency to repay debt. This is normally put into effect by ripping open the food sector to the volatility of international markets. Subsidised imported food floods in, destroying the suddenly unprotected agricultural sector.

Combined with austerity, such policies had a devastating impact. When food prices are low, the real impact can be masked. But when they rise, people realise all too quickly how vulnerable their food supply is. Djibo Bagna, president of the Peasant Association of Niger, believes structural adjustment ruined Nigerien agriculture: ’Of course, when this sector involves 85% of the population, this has consequences: lower production, a rural exodus, growing slums.’

Nor did a programme of austerity and liberalisation reduce debt levels – any more than it is doing in Greece. Niger’s debts continued to rise from $960m when structural adjustment started, to $1.8bn in 1990, and then, after falling off a little, an all-time high of $2.1bn in 2003. More debt meant more control by the IMF, which meant more austerity and more reforms.

After many years, debt cancellation for Niger was seen, even by the IMF, as unavoidable. Debt relief allowed Niger to improve education and increase access to safe drinking water. But it came with strings. A 19% sales tax on basic foods and rapidly rising prices put food further out of the reach of ordinary people. The sale of emergency grain reserves, a policy that has already caused famine in Malawi in 2002, did further damage to the population’s vulnerability.

These policies fed FED
Federal Reserve Officially, Federal Reserve System, is the United States’ central bank created in 1913 by the ’Federal Reserve Act’, also called the ’Owen-Glass Act’, after a series of banking crises, particularly the ’Bank Panic’ of 1907.

FED – decentralized central bank : http://www.federalreserve.gov/ into the 2005 famine, a crisis caused not primarily by natural catastrophe – food was available but unaffordable – but by an appalling set of policy decisions. Even during a crisis there was no let-up in economic dogma. The IMF told the Niger government not to distribute free food to those most in need. Today’s so-called ’tough love’ to Greece is nothing new.

Lagarde says: ’It’s sometimes harder to tell the government of low-income countries… to actually strengthen the budget and reduce the deficit.’ Hard but not impossible it seems, despite the impact it has had on poverty and inequality time and again.

The desperate impact of IMF policies on Niger has not even achieved the purported chief objective of the IMF – to control debt. In a Jubilee report released last week, we found that 10 years after debt cancellation, Niger’s debt payments as a proportion of government revenue are projected to be the same level as they were before cancellation. IMF attempts to ’restructure’ Niger have failed even in these terms.

To pretend that the IMF operated in a somehow kinder way towards Niger than it is doing in Greece stands up to no scrutiny whatever. The IMF’s policies cannot assist countries in crisis. Greece can learn from this – and has little to gain from Lagarde’s ’sympathy’.

Published by The Guardian