Committee for the Abolition of Illegitimate Debt

With the climate threat becoming more urgent every day, with the Global South facing a new debt crisis and with hunger increasing worldwide since the CoViD-19 pandemic, here are the few decisions that were made by the Spring Meetings 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 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.

in Washington (USA):

• The IMF announced an acceleration of the debt restructuring processes that have been ongoing for more than a year of Zambia, Ghana and Chad. This acceleration does not affect private creditors, who are in the majority and who often refuse to restructure the debts of over-indebted countries of the South. As a result its impact is very limited.
• Financing in an amount of 70 billion dollars was announced for various programmes of the World Bank over the next ten years, by some ten countries of the North.
• The World Bank announced policies aimed at providing access to electricity for 250 million persons in Africa by the end of the decade. This is a hypocritical announcement given the fact that systematically, the World Bank has prioritized electrical production for the benefit of major extractive-industry corporations, who are large energy consumers, at the expense of local citizens. According to the World Bank’s own figures, in 2021 only 20.8% of the people in Congo (DRC) had access to electricity. Outside the large cities, that number drops to less than 5%, or less than one out of 20 people. In Malawi, in 2021, only 15% had access to electricity; in Niger, only 19%; in Liberia, 29%; in Madagascar, 35%. All are countries where the World Bank has been active for decades. The overwhelming majority of the projects financed by the World Bank are defined without taking into account the needs of the populations affected by the construction of power plants, hydroelectric dams (which have a strongly negative impact on the environment and the populations that need to be displaced to build them); contrary to the Bank’s propaganda, it continues to further indebt countries in order to produce electricity from fossil fuels. It gives priority to megaprojects rather than to decentralized electricity production.

• A revision of the World Bank’s equity Equity The capital put into an enterprise by the shareholders. Not to be confused with ’hard capital’ or ’unsecured debt’. -to-lending ratio. This simply means that the World Bank will be able to lend more. This announcement will enable further loans for countries of the South, which of course means more debts and harsh conditionalities for those countries. Given the World Bank’s neoliberal ideological orientation, that is not good news for the people of the Global South.
• Ajay Banga has called for a “greater mobilisation of the private sector.” Under the pretext of development, the Bank continues its policy of “broader mobilization of private capital,” which is nothing more nor less than promotion of the private interests of the capitalist class. In fact, a closer examination of Bank documents reveals that priority has always been given to the private interests of the wealthiest classes over the public 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. . The World Bank Group’s enforcer for the private sector, the International Finance Corporation (IFC), and its clients in the financial sector have received favoured treatment when it comes to allocation of emergency resources. Further, whereas aid from the Group’s public sector has been presented as being aimed at strengthening public systems, the countries who receive it have been asked to conduct structural reforms whose purpose is to support the private sector and strengthen markets through liberalization, deregulation, etc. This consists, among other things, in reinforcing public-private partnerships to provide ostensibly public services.
• The renewal of the term of office of the European Kristalina Georgieva as head of the International Monetary Fund for five more years.

The pseudo-concern of the World Bank and the International Monetary Fund IMF over the level of poverty and inequality in the world in fact masks the IMF’s return as a destructive force since the pandemic. Taking advantage of the CoViD-19 pandemic, Russia’s aggression in Ukraine and the increase 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. by the central banks of the North – which have brought on a new international debt crisis –, the IMF has issued loans to more than a hundred countries in difficulty, imposing its usual neoliberal conditionalities: increases in the VAT, cuts to social budgets (health, education), cuts in subsidies for basic necessities, etc. Their practices have a harsher and harsher impact on the poorest populations, increase inequalities and obstruct the struggle against extreme poverty.

The CADTM once again denounces the domination of the two Western powers, the USA and Europe, over the governing bodies of the two Bretton Woods institutions through tacit agreement, whether or not one is headed by a citizen of the United States and the other by a European. The CADTM denounces the under-representation of the countries of the Global South in these two institutions. It recalls that until now, the 45 countries of sub-Saharan Africa have had to settle for 4.7% of the voting rights in the IMF and be forced to divide themselves into two groups, while the United States by itself holds more than 16.5% of the voting rights and Western Europe nearly 20%.

These few announcements also reflect the weakness of the reactions of the IMF and the World Bank in the face of the climate crisis the world is now in. Increasing loans and the accompanying debts and neoliberal conditionalities, or calling for “mobilization of the private sector” will not bring about the radical change that is needed. These Spring Meetings are another confirmation of the outmoded liberal capitalist vision that is still being defended by the Bretton Woods institutions.

The CADTM International network recalls that the solutions to the crises we are now undergoing will not come from these institutions, which are in fact part of the problem. The solution lies in mobilization of the people who are the victims of the debt system and of ultraliberal policies. The CADTM, an international network totally committed to supporting and broadening these mobilizations through education and the concretization of alternatives, calls for a complete refounding of the international architecture:

• Abolition of the Bretton Woods institutions
• Replacement of the IMF, the World Bank and the WTO WTO
  World Trade Organisation The WTO, founded on 1^st January 1995, replaced the General Agreement on Trade and Tariffs (GATT). The main innovation is that the WTO enjoys the status of an international organization. Its role is to ensure that no member States adopt any kind of protectionism whatsoever, in order to accelerate the liberalization global trading and to facilitate the strategies of the multinationals. It has an international court (the Dispute Settlement Body) which judges any alleged violations of its founding text drawn up in Marrakesh.
  
  with democratic institutions in which a country of the South would have as much voice as the USA, in which the financing granted (by the State complemented by loans in the case of very large investments) would make possible a radical environmental transition and policies for ending hunger in the world and further increases in inequalities.
• Abandonment of loan conditionalities that impose 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/ policies and austerity
• Bringing the World Bank before a court of law for its ongoing complicity with dictatorships. It supports the regimes of Mahamat Déby in Chad, Abdel Fatah al-Sissi in Egypt and Ferdinand Marcos Jr. in the Philippines.
• Implementation of citizen audits of debt and the cancellation/repudiation of illegitimate debts
• and a series of other measures aimed at bringing about the change to a radical environmental, feminist, antiracist path.

These solutions were defended at the counter-summit in Marrakesh: Marrakesh Statement

Translated by Snake Arbusto and Christine Pagnoulle