Committee for the Abolition of Illegitimate Debt

On Monday 10^th October, the International Observatory of the Debt (IOD), was launched at Parliament House in Brussels, Belgium. African, Asian and Latin-American representatives were present, as were anti-debt campaign-leaders, social and citizens’ movements, trade-unionists, jurists, NGO members and members of parliament from Brazil, the Philippines, Mali and Venezuela.

The International Observatory of the Debt was presented by the President of the Committee for the Abolition of Third World Debt (CADTM), Eric Toussaint, as «arising from an initiative of the World Social Forum to centralise analysis and research on debt-related issues». Its main instrument will be Internet. Its Website will reflect the IOD’s activities and «will include information, data-bases and studies offering alternatives to those carried out by organisations like 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.

, 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) and the financial information “factories” used to back up policies and interpretations which go against the interests of the people».

Professor Jorge Marchini, of the University of Buenos Aires, explained that as he saw it, «the Observatory will not replace national and international campaigns against the debt. On the contrary, its purpose is to give them objective scientific backing with high-level academic research from a variety of countries».

For Camille Chalmers, Professor of Politics at the University of Port-au-Prince in Haiti, the Observatory will bring «support for our countries’ demands and mobilisation against the application of neo-liberal policies and permanent 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/ . The time has come to fight for full-scale audits and to propose alternatives».

The meeting with journalists from the main Belgian media was closed by Pierre Galand, saying that the event was « of enormous importance for the analysis and search for solutions to what is a huge issue of dramatic proportions for Third World countries».

The Web-site www.oid-ido.org will be launched on 24 October 2005. There will also be an official presentation of the Observatory in Mexico City on 29 October.