Committee for the Abolition of Illegitimate Debt

The debt campaigners and activists from South Asia including participants from Nepal, Pakistan, Bangladesh, Sri Lanka, Bhutan and India that have assembled at Katmandu for the “2^nd South Asian workshop on International Financial Institutions (IFIs) and the Debt Crisis” have called for region wide resistance movements against anti-people policies of the International Financial Institutions (IFIs) . This conference has been jointly organized by SAAPE, VAK and NGO Federation of Nepal. Around 50 participants from various organizations across different countries of the region have taken part in this workshop.

This two day workshop from 14-15 January, 2009 also witnessed the presence of leading International Debt Campaigners from Belgium and Philippines, Dr. Eric Toussaint, President of CADTM (Committee for the Abolition of third world debt) and Ms. Lidy Nacpil, from Jubilee -South Asia Pacific Movement on Debt and Development (JS-APMDD).

Presentations from Dr. Dilli Raj Khanal, ex-member of the National Planning Commission of Nepal, on the Nepalese macro-economic situation and the overall economic crisis and Dr. Eric Toussaint on the overall global capitalist crisis were the highlights of the first day. The second day was marked by a presentation by Prof. Ram Bapat on the questions of democracy and governance and also discussions on the concepts of illegitimate and 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. led by Lidy Nacpil. The proceedings were interspersed with presentations of the country situations in South Asia. The participants also discussed and finalized a future course of actions.

The major themes highlighted in the conference were the attempts by the Asian Development Bank to privatize the Kathmandu drinking water supply system and the imposition of stringent conditionalities for providing aid. The participants observed that the privatization of state owned enterprises under neo-liberal agenda minimizes the state’s sovereignty and welfare role and strengthen the repressive mechanisms which serve the interests of the multinational companies at the cost of the people.

Various other presentations from Pakistan, Sri Lanka, Bhutan, Bangladesh and India demystified and condemned the roles of IFIs in increasing the burden of debt, privatizing basic services and thus making it out of control of the working poor, clear violations of Human Rights and environmental concerns, etc. It was observed that all this was done in the name of development and progress.

It was observed with sadness that no governments in South Asia dared to confront the hegemonies of the IFIs in spite of tremendous mass mobilizations and demands from below. In order to strengthen South-South co-operation the assembly gave a call for the “Bank of the South”.

The future course of action decided to take the issue forward in terms of mass awareness campaigns and mobilizations to force the South Asian governments in the various countries of the region to resist the anti-people policies imposed by the IFIs, to say “no” to the conditionalities imposed by the IFIs and also to get 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.

, Asian Development Bank (ADB) and the International Monetary Fund 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 (IMF) out of the region.

Dr. Netra Timsina