Committee for the Abolition of Illegitimate Debt

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 Advancing the Fight for Debt, Economic and Climate Justice

As 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 and 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.

hold their annual meetings, and many Ministers of Finance meet, billions of people across all global regions increasingly remain caught in the tightening grip of polycrisis, ever-growing in breadth and scale. Much of the harm traces back to the policy prescriptions of these leading international institutions, who in their 81^st year continue to leave a trail of devastation and human rights violations in their wake.

Especially for peoples of the Global South, heavily weighed down by unprecedented and illegitimate public debt burdens in the context of an intensifying climate crisis, profound changes in the international economic and financial architecture are key to their very survival. But the IMF and the World Bank, and the richest countries that own and control and are enriched by them, stand in the way of the transformative changes needed for a fairer, and sustainable world.

It’s time to demand an end to the destruction — Stop the harm, Cancel the Debt, Reparations and Just Transition Now!

 Cancel Unsustainable and Illegitimate Debts!

The IMF-World Bank Annual meetings take place against a grim backdrop of billions of people, mostly in the Global South, caught in an escalating debt crisis. Public debts of the Global South or developing countries are reported by UNCTAD UNCTAD
United Nations Conference on Trade and Development This was established in 1964, after pressure from the developing countries, to offset the GATT effects.

to have reached $31 trillion in 2024, having grown twice as fast as in the Global North since 2010. The unabated rise in public debts of Global South countries paints a grim picture: about 3.3 billion people live in countries forced to spend more on loan 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. payments than education, health, or climate investment – the outcome of years of colonial and neo-colonial reshaping of Southern economies to ensure resource extraction and endless debt servicing.

For too long, global debt governance has been the purview of the IMF, the World Bank and the G7 countries that control them and the increasingly concentrated interests of private transnational capital. They define lending and borrowing rules, set repayment terms and enforce onerous austerity conditions that have beggared the Global South, gutted public services, eroded local economies and violated rights.

Debt repayments claimed from the Global South include debt-funded projects tainted with fraud and corruption, and whose enduring negative impacts on people, economies and the planet overshadow any benefit claimed by lenders. The loans that bankrolled them are clearly illegitimate and must be immediately and unconditionally cancelled.

Among them are coal-fired power projects implemented through the International Finance Corporation (IFC), the private sector arm of the World Bank, in India, Bangladesh and the Philippines. Since the Bank’s avowed policy shift away from coal in 2013, more than 40 coal projects are known to have received funding from IFC-supported banks and investment funds Investment fund
Investment funds Private equity investment funds (sometimes called ’mutual funds’ seek to invest in companies according to certain criteria; of which they most often are specialized: capital-risk, capital development funds, leveraged buy-out (LBO), which reflect the different levels of the company’s maturity. .

 Democratic Debt Governance: We Need a UN Debt Convention!

The unfair global debt architecture, centred on the IMF and G20 G20 The Group of Twenty (G20 or G-20) is a group made up of nineteen countries and the European Union whose ministers, central-bank directors and heads of state meet regularly. It was created in 1999 after the series of financial crises in the 1990s. Its aim is to encourage international consultation on the principle of broadening dialogue in keeping with the growing economic importance of a certain number of countries. Its members are Argentina, Australia, Brazil, Canada, China, France, Germany, Italy, India, Indonesia, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, USA, UK and the European Union (represented by the presidents of the Council and of the European Central Bank). , gives no voice to borrower nations and has overseen a never-ending cycle of debt crises with no binding principles agreed on responsible lending and borrowing. The obligations established by existing international and regional human rights norms are systematically ignored by lenders and borrowers, both public and private. The adoption of a UN Framework Convention on Sovereign Debt Sovereign debt Government debts or debts guaranteed by the government. was a key proposition put forward by many Global South countries and civil society at the 4^th UN Financing for Development Conference in Seville in July 2025. We saw this blocked by Global North (mostly European countries), defending their self-interest at the cost of human rights, gender equality and the environmental safety and sustainability of Global South peoples. The momentum for agreeing on a UN Debt Convention must thus be sustained as part of our fight against a deeply inequitable system of financial and debt governance, with a view to reaching a UN General Assembly resolution in 2026, similar to the path taken towards a UN Framework Convention on Tax that can contribute to steadily eroding the OECD OECD
Organisation for Economic Co-operation and Development OECD: the Organisation for Economic Co-operation and Development, created in 1960. It includes the major industrialized countries and has 34 members as of January 2016.

http://www.oecd.org/about/membersandpartners/ ’s dominance in setting global tax rules.

We will continue our steady support for popular movements that demand debt justice and governments that seek to fulfill their human rights obligations in relation to lending, borrowing and debt servicing and to build a global regulatory environment that enforces sovereign rights to stop payment and/or repudiate unsustainable and unjust debt claims.

 No to Loans as Climate Finance! Stop Lending for Fossil Fuel Projects!

Despite green pledges, IMF - World Bank advice and conditions continue to drive countries to further fossil fuel expansion. The World Bank continues to directly invest at least US$1 billion in fossil fuel projects in developing countries - and indirectly, on an even greater scale, including through policy advice or promotion, trade finance and budget support. Fossil fuel projects lock countries into high carbon energy and the risk of stranded assets, take finance away from clean energy projects and exacerbate climate impacts which disproportionately affect women and vulnerable communities. The World Bank must end all direct and indirect conditions and finance that deepen fossil fuel dependency.

World Bank and IMF conditions are leading countries to entrapment in a cycle of debt and fossil fuels. Indebted Global South countries are induced to expand fossil fuel and minerals extraction and export-oriented industrial agriculture to earn foreign currencies to repay debts. But these, in turn, accelerate the climate crisis, undermine national sovereignty and further reinforce the control wielded by geopolitical interests and private transnational capital.

Such prescriptions gravely impair food sovereignty and the rights of communities to control their own food systems, as recognized in the UN Declarations on the Rights of Peasants and the Rights of Indigenous Peoples. The resulting loss of biodiversity, increased vulnerability to climate shocks, and greater dependency on global commodity markets continues to this day with even greater intensity.

Fossil fuels, in particular, require huge investment to deliver returns, usually leading to more debt. In flagrant violation of the UN Climate Convention’s principle that those most responsible for causing the climate crisis pay up their climate debt, many climate-vulnerable countries mostly in the Global South are charged the highest 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. on loans while pushed by the IFIs and the Global North to take on more loans as climate finance. The cycle is ruthlessly vicious – debts swiftly accumulate to crisis levels while more intense and frequent climate-induced disasters strike, leading to rapid depletion of already meager financial resources, and forcing governments to borrow more.

We must strongly oppose the significant roles accorded to the IFIs and other MDBs in delivering finance for climate action, pressing on with our demands that climate finance should be new and additional to be provided by Global North governments, grants-based and should not add to the continuing loss of sovereignty and self- determination over territories and nature. As they peddle more loans for climate survival, impose onerous conditions and persist in subsidizing the fossil fuel sector, they ignore the Global North’s historical responsibility to fund climate action and all the more perpetuate and multiply debt burdens. They do not have the credibility, much less the legitimacy, to deliver climate finance transparently, justly and equitably.

 End Austerity!

Since independence many global south countries have been burdened by debt acquired from global north banks, other private financial actors and international financial institutions to sustain their economies. Most of the Global South countries inherited inequitable systems shaped by colonial powers, where the majority of the population were disenfranchised by racist and extractive systems. As they embarked on a journey towards more inclusive and equitable systems, the geopolitical interests of those same colonial powers and the rise of a more speculative and finance-based global economy pushed countries into high levels of debt that turned into a widespread payments crisis when interest rates were raised unilaterally by the North. The Bretton Wood institutions then imposed structural adjustments under the Washington Consensus neoliberal policies in the 1980s and 1990s as conditions for debt relief and access to financing, causing even more damaging harm especially for women and children, rural sectors and indigenous peoples as social investment was slashed, leaving Global South peoples in a downward spiral of socio-economic challenges.

The 2007–08 financial crisis triggered in the North, ushered in another decade of austerity (2010–2019), largely under IMF conditionality. Health, education, and other essential public social services have since become impoverished, while ordinary working people are slapped with indirect regressive taxes to fund social spending, such as on hospitals, schools, water and sanitation, and decent wages for the public sector. These have rendered already precarious lives of millions in the Global South even more vulnerable to crises of health, economic, climate and other shocks.

Austerity measures are a debt and death trap for the Global South. Austerity policies wrongly blame public spending while ignoring the bleeding of financial resources from oppressive debt repayments and the wanton tax abuses by corporations and wealthy individuals that drive illicit financial flows. They further deepen inequalities as public services stagnate and private interests are protected, resulting in the outright violation of a host of human rights, overall.

 No to False Financial Solutions!

The current systemic failures and crises have deep historical and structural roots and demand no less than profound and systemic changes. We must expose and debunk false solutions for sustaining grossly unjust economic and financial systems that enrich a few while wreaking havoc and grievous harm to people and the planet.

In FFD4, the G20 Common Framework and other modest debt reforms that are also avidly promoted by the IFIs, again claimed to offer ways out of the debt crisis. But the dismal track record of such lender-led forums and arrangements from the 80s onwards, clearly expose how they primarily serve the interests of the Global North and private lenders. As evidenced by unending waves of debt crises, they have proven useless and futile in addressing the root causes of unsustainable and illegitimate debt. They have also failed to act on the demand of the Global South for debt cancellation to break the cycle of perpetual indebtedness.
There is also a growing and dangerous push for debt swaps - for nature, climate, education or other purposes – yet another false solution that masks the intent to profit Profit The positive gain yielded from a company’s activity. Net profit is profit after tax. Distributable profit is the part of the net profit which can be distributed to the shareholders. from the crisis suffered by the peoples and nature of the South. Discredited debt swap experiences reveal, among others, profits made by banks and other intermediaries, insignificant debt reduction, if at all, a lack of transparency, greenwashing and the dislocation of communities in the name of conservation and legitimizing fraudulent, harmful illegitimate debt-funded projects.

FFD4 missed out on adopting one of the steps that holds potential for giving Global South countries a voice and a say on debt governance – a UN Debt Convention. The fight for this must be sustained as part of our bigger struggle for the transformation of an economic and financial system that has never ceased to be colonial, extractive and unfair to the Global South.

 Immediate Fulfillment of Global North Countries’ Obligations to Deliver Climate Finance for the Global South and for a Just Transition

The rich countries of the North have a legal obligation under the UNFCCC to deliver public, new and additional, adequate, and non-debt creating climate finance to the Global South, based on the recognition of their primary responsibility for the climate crisis, and their historical, excessive, fast-increasing, accumulated, and continuing greenhouse gas emissions that constitute the main physical cause of global warming. But rich countries continue to evade and shirk from this responsibility, thus allowing the climate crisis to continue unabated and leaving Global South countries to face the impacts on their own, despite contributing little to global emissions.

Because of their climate debt, rich countries must provide no less than $5 trillion/year in public, grants-based finance to meet their obligations for adaptation, mitigation, loss and damage, and just transition. These climate finance obligations must be delivered through accessible, democratic and transparent channels (such as the UNFCCC climate funds) and not through multilateral development banks and other undemocratic and Global North led institutions. People and communities on the frontlines must not only benefit—they must lead in designing and implementing climate responses and just transition plans.

There are already indications that the term and concept of ‘Just Transition’ is being co-opted by IFIs, as seen in their push for more loans and corporate financing to fund this process, including fossil fuel phase-out, and defining activities eligible for investment. This trajectory must be resisted. A Just Transition cannot happen if countries are fiscally unable to invest in renewable energy, protect workers and deliver on public services and social protections. Current MDB financing for so-called ‘Just Energy Transition’ is overwhelmingly loans-based, leaving the door open for false solutions and focusing on mega-projects with high social and environmental costs. Just transition, particularly for those on the frontlines of climate impacts and inequality, requires debt cancellation without conditionalities and large-scale public finance on grant terms.

We must demand and secure a transition that will address potential dislocations and disruptions, guarantee the protection and promotion of the rights and welfare of people, ensure that the costs as well as the benefits of the transition are shared equitably, upholding justice as paramount. We must thus build an equitable and just transition agenda from the ground up. A just transition must be anchored in the principles of solidarity, people-centered economies, supporting workers’ and community-led initiatives, democratic public finance, comprehensive investment in public services, and participatory governance. Establishing international and national mechanisms for Just Transition is an imperative to accelerate, consolidate, and achieve a holistic Just Transition across whole economic and financial systems between and within countries - based on the principles of historical responsibility, equity Equity The capital put into an enterprise by the shareholders. Not to be confused with ’hard capital’ or ’unsecured debt’. , Common But Differentiated Responsibilities and Respective Capacities (CBDR-RC), redistributive, reparative and restorative Justice.

 Reparations Now!

Waves of debt accumulation have been a central phenomenon of the global economy since the 19^th Century when sovereign debt developed as a powerful tool for colonial empire-building. This trend led to capital market expansion by creditors from industrialized countries who saw an opportunity to invest heavily abroad for their own benefit. This influx of foreign capital dangerously inflated the debt of occupied and more impoverished countries, bringing them closer to insolvency. Despite successful anti-colonial struggles, former colonies have continued to face debt legacies that they inherited from colonial regimes, as well as ongoing extractivism and economic imperialism. The current debt claimed from Global South peoples has not only been shaped by European and U.S. colonialism and its legacies, but also neo-colonialism as a tool through which the north and its institutions and corporations continue to extract resources and exercise hegemony over global south countries and communities.

Peoples throughout the Global South demand the urgent cancellation of illegitimate, odious and colonial debts as part of the repatriations due for the atrocities, violations and enslavement; for the historical injustices of past events and their contemporary legacies that still manifest in our society today. These include the case of Congo that inherited debts from Belgium; Tunisia that went into debt in order to buy its own land from colonizers; and Haiti that France threatened with another military invasion and the reestablishment of slavery if it did not pay a compensation of 150 million gold francs. Ever since then Haitian indemnity weakened the struggle for liberation and paved the way for foreign control of Haitian systems and more debts . The South urgently demands financial reparations to address the destruction and harm caused during colonialism, neo-colonialism and for the lasting impact these continue to have on people, the natural environment, and how our world operates today.

The case for reparations is also undeniably clear in the demand for climate justice. Global North countries industrialised and developed through colonial extraction and exploitation as well as unfairly appropriating the atmospheric commons, thus incurring an enormous debt to the Global South. This debt of the global north is 70 times greater than the total sum of all the external debts claimed from the South. But the huge debts and reparations owed by those rich countries that have profited from these processes go largely unpaid and unenforced whilst the debts claimed from those countries they have indebted and impoverished are brutally enforced. It is time to change this unjust, profit-driven system and build a new multilateral order founded on respect for sovereignty, self-determination, the sustainability of the planet and the rights of people and nature.

Cancel unsustainable and illegitimate debts!
Democratize the global debt and financial architecture!
Grants, not loans for Climate Action! Stop fossil fuel lending!
End austerity and other onerous loan conditions!
Reparations and Just Transition Now!

THIS WORLD IS OURS!
RESIST, RECLAIM, RISE UP for SYSTEM CHANGE!

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