Press release
19 December 2005 by CADTM
Last summer the summit meeting of the eight most industrialised countries (G8
G8
Group composed of the most powerful countries of the planet: Canada, France, Germany, Italy, Japan, the UK and the USA, with Russia a full member since June 2002. Their heads of state meet annually, usually in June or July.
) decided that the 18 highly indebted poor countries that had satisfied the many demands imposed on them could benefit from a complete cancellation
of their debt to 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
, 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 the African Development Bank.
In September, despite strong misgivings voiced by small rich countries such as Belgium and Switzerland, the IMF general meeting sanctioned the agreement that the G8 had committed it to, surprisingly if one considers the G8’s own statements on good governance.
Yet now, far from media attention, the IMF Executive Board is trying to rescind its commitment or at least reduce its impact. To this effect it will be suggested to the Board of Governors’ meeting next Wednesday (21 December) that they add conditionalities for countries that will no longer
be part of an IMF programme from the beginning of 2006.
While the G8’s original agreement was presented as final and definite, the IMF now wants to subject these countries to further monetary and fiscal conditions, after several decades of drastic reforms that have already deeply eroded the living conditions of a large majority of their
people.
The G8 countries control 49.73% of the votes at the IMF Board of Governors, so no agreement can be reached without their consent. If the IMF achieves its goal,
the G8 countries will have broken their own commitment.
The CADTM finds it intolerable that the IMF should thus attempt by every possible means to delay the implementation of even such a limited measure, given the few countries involved. The IMF, being a tool in the hands of powerful countries and interests, strives behind the scenes to maintain the political lever of the debt while parading sensational announcements that soon turn out to lack any substance.
The CADTM demands the complete and unconditional cancellation of the debt incurred by all developing countries as the only way of releasing them from their creditors’ exigencies.
The CADTM condemns the IMF for blocking debt relief for 6 countries PARIS, 17 Dec. 2005 (AFP) - The Committee for the Abolition of Third World Debt (CADTM) protests against further obstacles placed by the International Monetary Fund (IMF) in the way of debt relief for six very poor countries, it said in a press release on Saturday. "Behind the scenes, the IMF Executive Board is now trying to go back on its commitment, made last summer, by persuading the Board of Governors to add conditionalities for countries that will no longer be part of an IMF programme from the beginning of 2006," claims the CADTM. According to the Committee, six countries are concerned, namely Ethiopia, Madagascar, Mauritania, Rwanda, Senegal and Nicaragua. Last summer, the summit meeting of the eight most industrialised countries (G8) decided that 18 highly indebted poor countries that had satisfied the many demands imposed on them could benefit from a complete cancellation of their debt to the IMF, the World Bank and the African Development Bank, recalled the CADTM. “The G8 countries control 49.73% of the votes at the IMF Board of Governors so that no agreement can be reached without their consent. If the IMF achieves its goal, the G8 countries will have broken their own commitment,” warns the CADTM, who are demanding “the complete and unconditional cancellation of the debt incurred by all developing countries.” |
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