Committee for the Abolition of Illegitimate Debt

The referendum on secession for South Sudan is due to take place on Sunday 9 January. If South Sudan votes to secede a key decision will be on what happens to Sudan’s external debt of $35 billion, $20 billion of which is 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. on original loans. [1]

Tim Jones, policy officer at Jubilee Debt Campaign, said:

“No nation should be born into debt. The people of South Sudan need a fair start rather than taking on the burden of past unjust debts. If South Sudan does inherit any debt it should be immediately cancelled.”

The history of debt is that it is used by 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 and 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.

to force free market economic policies on countries. The people of South Sudan are voting for independence, not to become subservient to organisations in Washington DC.”

Much of Sudan’s debt dates back to the early 1980s from the dictatorship of Gaarfar Nimeiry, when western governments supported the regime during the Cold War and to gain access to Sudanese oil for their companies. In 1985 it was $9 billion but has since grown to $35 billion due to interest and charges, as well as new loans to the dictatorship of Omar al-Bashir. [2]

Tim Jones said:

“Sudan’s debt is illegitimate, coming from Cold War loans to dictator Nimeiry or more recent loans to the regime of Omar al-Bashir. The debt has served the interest of foreign powers, not the people of Sudan.”

Over recent years 32 countries have had debts cancelled through the official IMF and World Bank debt relief process. Both Sudan and South Sudan potentially qualify for this debt relief. However, this usually takes several years, requires countries to make repayments in the meantime, leads to new loans and debts being created, and requires countries to follow IMF and World Bank conditions such as privatisation and deregulation.

The UK government claims Sudan owes it £650 million as a result of past failed export projects. [3] However, the UK government has not revealed what projects this debt ultimately supported. If and when any or all of this debt is cancelled, the UK government will count this as ‘aid’. [4].

Contact:

Tim Jones, Policy Officer, +44(0)7817 628196 begin_of_the_skype_highlighting +44(0)7817 628196

Source: Jubilee Debt Campaign