Committee for the Abolition of Illegitimate Debt

Where ? February 16, 2024, 09:00AM – 11:30 AM (Nepali Time)
When ? World social forum Nepal

A new debt crisis is affecting a series of countries in the South, whether in South Asia (Sri Lanka, Pakistan, Bangladesh, etc.), sub-Saharan Africa (Ghana, Zambia, etc.), North Africa (Tunisia, Egypt, etc.), the Middle East (Lebanon, etc.), Latin America (Argentina) or the Caribbean (Puerto Rico, Cuba, etc.). Some of these countries have defaulted on their debts.

The crisis is caused by a succession of external shocks that are severely affecting the economies of the South. These external shocks are the result of actions and events originating in the Northern imperialist countries (rise in interest rates Interest rates When A lends money to B, B repays the amount lent by A (the capital) as well as a supplementary sum known as interest, so that A has an interest in agreeing to this financial operation. The interest is determined by the interest rate, which may be high or low. To take a very simple example: if A borrows 100 million dollars for 10 years at a fixed interest rate of 5%, the first year he will repay a tenth of the capital initially borrowed (10 million dollars) plus 5% of the capital owed, i.e. 5 million dollars, that is a total of 15 million dollars. In the second year, he will again repay 10% of the capital borrowed, but the 5% now only applies to the remaining 90 million dollars still due, i.e. 4.5 million dollars, or a total of 14.5 million dollars. And so on, until the tenth year when he will repay the last 10 million dollars, plus 5% of that remaining 10 million dollars, i.e. 0.5 million dollars, giving a total of 10.5 million dollars. Over 10 years, the total amount repaid will come to 127.5 million dollars. The repayment of the capital is not usually made in equal instalments. In the initial years, the repayment concerns mainly the interest, and the proportion of capital repaid increases over the years. In this case, if repayments are stopped, the capital still due is higher…

The nominal interest rate is the rate at which the loan is contracted. The real interest rate is the nominal rate reduced by the rate of inflation. decided by the Central banks of North America and Western Europe; increase in the price of food, fuel and fertiliser following the invasion of Ukraine, etc.). The policies of 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 not changed, nor have those of 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 as many countries in the South have just taken up IMF loans, they are having to apply anti-grassroots neoliberal policies to an even greater extent.

Speakers:

Sushovan Dhar, CADTM India, member of the WSF international secretariat and of Asia Pacific Social Forum

Eric Toussaint, CADTM international spokesperson, member of the Scientific Council of ATTAC France, member of the WSF International Council since its foundation in 2001

Balasingham Skanthakumar of the Social Scientists’ Association of Sri Lanka and the CADTM’s South Asia network

Amali Wedagedara, activist and researcher specializing in agrarian debt and development, Sri Lanka

Abdul Khaliq, Focal Person CADTM-Pakistan and Executive Director, Institute for Social & Economic Justice, Pakistan

David Otieno, Kenyan Peasant League, CADTM Eastern Africa, Kenya

Solange Kone, World March of Women, CADTM Western Africa, Ivory Coast