World Debt Figures 2015 : Chapter 4

The World Bank and the IMF

23 February 2015 by Eric Toussaint , Daniel Munevar , Pierre Gottiniaux , Antonio Sanabria

Multilateral financial organisations are at the core of the ‘debt system’. Since they were established in 1944 (in the framework of the Bretton Woods Agreement), the World Bank World Bank
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 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.
have used debt as a mechanism to promote the implementation of policies favouring creditors and private companies to the detriment of people’s well-being.

4.1. The HIPC Heavily Indebted Poor Countries
In 1996 the IMF and the World Bank launched an initiative aimed at reducing the debt burden for some 41 heavily indebted poor countries (HIPC), whose total debts amount to about 10% of the Third World Debt. The list includes 33 countries in Sub-Saharan Africa.

The idea at the back of the initiative is as follows: a country on the HIPC list can start an SAP programme of twice three years. At the end of the first stage (first three years) IMF experts assess the ’sustainability’ of the country’s debt (from medium term projections of the country’s balance of payments and of the net present value (NPV) of debt to exports ratio.
If the country’s debt is considered “unsustainable”, it is eligible for a second stage of reforms at the end of which its debt is made ’sustainable’ (that it it is given the financial means necessary to pay back the amounts due). Three years after the beginning of the initiative, only four countries had been deemed eligible for a very slight debt relief (Uganda, Bolivia, Burkina Faso, and Mozambique). Confronted with such poor results and with the Jubilee 2000 campaign (which brought in a petition with over 17 million signatures to the G7 meeting in Cologne in June 1999), the G7 (group of 7 most industrialised countries) and international financial institutions launched an enhanced initiative: “sustainability” criteria have been revised (for instance the value of the debt must only amount to 150% of export revenues instead of 200-250% as was the case before), the second stage in the reforms is not fixed any more: an assiduous pupil can anticipate and be granted debt relief earlier, and thirdly some interim relief can be granted after the first three years of reform.

Simultaneously the IMF and the World Bank change their vocabulary : their loans, which so far had been called, “enhanced structural adjustment facilities” (ESAF), are now called “Growth and Poverty Reduction Facilities” (GPRF) while “Structural Adjustment Policies” are now called “Poverty Reduction Strategy Paper”. This paper is drafted by the country requesting assistance with the help of the IMF and the World Bank and the participation of representatives from the civil society.
This enhanced initiative has been largely publicised: the international media announced a 90%, even a 100% cancellation after the Euro-African summit in Cairo (April 2000). Yet on closer examination the HIPC initiative turns out to be yet another delusive manoeuvre which suggests but in no way implements a cancellation of the debt.

List of the 42 Heavily Indebted Poor Countries: Angola, Benin, Bolivia, Burkina Faso, Burundi, Cameroon, Central African Republic, Chad, Comoro Islands, Congo, Ivory Coast, Democratic Republic of Congo, Ethiopia, Gambia, Ghana, Guinea, Guinea-Bissau, Guyana, Honduras, Kenya, Laos, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nicaragua, Niger, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, Somalia, Sudan, Tanzania, Togo, Uganda, Vietnam, Zambia.
(Heavily Indebted Poor Countries) Initiative [1]

The HIPC Initiative is a clear example of the link between debt and neoliberal policies. This initiative to relieve some of the debt of a handful of very poor and heavily indebted countries was launched in 1996 by the World Bank and the IMF in the framework of the mandate given to them by the major powers within the G7 (USA, UK, Germany, France, Canada, Italy, and Japan). The policy was intended to last for six years. Yet it is still continuing in 2014, having lasted ten years longer than expected.

On the whole, the HIPC Initiative has turned out to be a fiasco. It has amounted to making sure that the developing countries concerned pay back their debt up to a threshold value, in one go, with no late payments, and to the maximum of their financial capacities. In fact, the creditors still want the debt repaid without the fear of a sudden interruption of payment by one country or another. In that sense, the threshold defined by the HIPC Initiative corresponds to the maximum debt level that a country can bear without requiring a restructuring of the debt. The HIPC Initiative is thus limited to resetting the debt at the maximum sustainable level. It therefore comes down to cancelling the debts that could not in any case be repaid, those that could lead the country to suspend repayment. Even worse, any debt relief remains conditional on the application of a wide range of neoliberal measures that negatively affect the living conditions of most of the people, violate human rights, and weaken the economies of the countries concerned by exposing them to international competition, with local producers unable to rely on any measures of assistance.

4.1.1. A failure in terms of scope: only 39 countries involved

The initiative only concerns a small number of countries (39) and a low proportion of the population living in poverty (only 11% of the total population of developing countries).

Table 4.1 – Countries concerned by the HIPC Initiative

HIPC (Highly Indebted Poor Countries) initiative
Number of HIPC 39
Portion of the population of DCs in HIPC countries 11 %
HIPC countries with debt levels considered to be sustainable 4
Countries having refused the initiative 5
HIPC countries that may be eligible 44
HIPC countries having acheived decision point requirements in October 2013 36
HIPC countries having reached completion point in October 2013 35

4.1.2. Major delays: a policy that was supposed to end in 2004

Table 4.2 – State of progress of the HIPC Initiative in 2013

HIPC countries having reached completion point in October 2013
Afghanistan 2010 Gambia 2007 Mozambique 2002
Benin 2003 Ghana 2004 Nicaragua 2004
Bolivia 2001 Guinea 2012 Niger 2003
Burkina Faso 2002 Guinea-Bissau 2010 Rwanda 2005
Burundi 2009 Guyana 2003 Sao Tome and Principe 2007
Cameroon 2006 Haïti 2009 Senegal 2004
Central African Republic 2009 Honduras 2005 Sierra Leone 2006
Comoros 2012 Liberia 2010 Tanzania 2001
D.R. Congo 2010 Madagascar 2004 Togo 2010
R. Congo 2010 Malawi 2006 Uganda 2000
Ivory Coast 2012 Mali 2003 Zambia 2005
Ethiopia 2004 Mauritania 2002
Decision point acheivedWaiting candidates
Chad 2001 Somalia, Eritria, Soudan
Countries having refused the HIPC initiative
Laos Burma,,Sri Lanka, Bhoutan,,Nepal

4.1.3. The debt service Debt service The sum of the interests and the amortization of the capital borrowed. of 36 of the countries concerned has hardly decreased at all

The statistics concerning the 36 countries that reached decision point show that their debt service fell moderately for the first few years, but has risen again since 2001.

Table 4.3.

4.1.4. False debt relief for certain ‘poor’ countries

The objective of the HIPC Initiative was to reduce the net debt-to-export ratio below the threshold of 150%.

Table 4.4 – External debt stock Debt stock The total amount of debt / exports ratio for certain HIPC Initiative countries

4.2. Structure of the International Monetary Fund (IMF) [3]

Multilateral institutions act in function of the interests of creditors within the international financial system. To put it more precisely, the institutional decision-making structure is characterised by an anachronism that disproportionately benefits the most industrialised countries, and the financial companies and multinationals they represent.

4.2.1. IMF voting shares

Table 4.5 – Distribution of IMF voting shares (2014)

Country % Groupe presided by % Groupe presided by %
USA 16,8 Netherlands 6,6 Egypt 3,2
Japan 6,2 Venezuela 4,9 Austria 2,9
Germany 5,8 Italy 4,2 India 2,8
France 4,3 Indonesia 3,9 Switzerland 2,8
UK 4,3 Korea 3,6 Brazil 2,6
China 3,8 Canada 3,6 Iran 2,3
Saudi Arabia 2,8 Denmark 3,4 Argentina 1,8
Russia 2,4 Gambia 3,3 Togo 1,6

That’s how we vote at the IMF !

4.2.2 Comparison of voting shares within the IMF

Table 4.6 – Population and IMF voting shares (2014)

Country or groupPopulation in 2012 (in millions)IMF voting share Share A unit of ownership interest in a corporation or financial asset, representing one part of the total capital stock. Its owner (a shareholder) is entitled to receive an equal distribution of any profits distributed (a dividend) and to attend shareholder meetings. (%)
China 1 350,0 3,8
India 1 236,0 2,8
USA 313,0 16,8
Russia 143,0 2,4
Japan 127,0 6,2
France 65,0 4,3
Saudi Arabia 28,0 2,8
Belgium 11,0 1,9
Switzerland 8,0 1,4
Luxembourg 0,5 0,2

4.2.3 Evolution of IMF voting rights since 1945

Table 4.7 – Historical evolution of IMF voting rights (in %) from 1945 to 2014

Country 1945 1981 2000 2013
Industrialised countries: of which 67,5 60 63,7 54,6
USA 32,0 20,0 17,7 16,8
Japan - 4,0 6,3 6,2
Germany - 5,1 6,2 5,8
France 5,9 4,6 5,1 4,3
UK 15,3 7,0 5,1 4,3
Petroleum producing countries: of which 1,4 9,3 7 6,6
Saudi Arabia - 3,5 3,3 2,8
Developing countries: of which 31,1 30,7 29,3 38,8
Russia - - 2,8 2,4
China 7,2 3,0 2,2 3,8
India 5,0 2,8 2,0 2,3
Brazil 2,0 1,6 1,4 1,7

4.3 Structure of the World Bank

4.3.1. Voting power in the World Bank

Table 4.8 – Distribution of voting power in the World Bank (2014)

Country  % Groupe presided by  % Groupe presided by  %
USA 16,0 Belgium 5,1 Italy 3,2
Japan 8,0 Mexico 4,4 Algeria 3,2
Germany 5,2 Netherlands 4,1 Switzerland 3,0
France 4,5 Canada 4,0 Kuwaït 2,8
UK 4,0 Australia 4,0 Malaisia 2,8
China 4,0 India 3,6 Argentina 2,1
Saoudi Arabia 2,2 Finland 3,3 Zambia 1,8
Russia 2,2 Philippines 3,3 Sao Tome and Principe 1,8
Nigeria 1,6

4.3.2. Comparison of voting power in the World Bank

Table 4.9 – Population and voting power in the World Bank (2014) [5]

Country or group Population in 2012 (in millions) Voting power (%)
China 1350,0 5,2
India 1236,0 3,0
USA 313,0 16,0
Russia 143,0 2,2
Japan 127,0 8,0
France 65,0 4,0
Saoudi Arabia 28,0 2,2
Belgium 11,0 1,6
Switzerland 8,0 1,6
Luxembourg 0,5 0,1

4.3.3. The World Bank network

The World Bank Group is made up of five agencies: the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the International Centre for Settlement of Investment Disputes (ICSID ICSID The International Centre for the Settlement of Investment Disputes (ICSID) is a World Bank arbitration mechanism for resolving disputes that may arise between States and foreign investors. It was established in 1965 when the Washington Convention of that year entered into force.

Contrary to some opinions defending the fact that ICSID mechanism has been widely accepted in the American hemisphere, many States in the region continue to keep their distance: Canada, Cuba, Mexico and Dominican Republic are not party to the Convention. In the case of Mexico, this attitude is rated by specialists as “wise and rebellious”. We must also recall that the following Caribbean States remain outside the ICSID jurisdiction: Antigua and Barbuda, Belize, Dominica (Commonwealth of) and Suriname. In South America, Brazil has not ratified (or even signed) the ICSID convention and the 6th most powerful world economy seems to show no special interest in doing so.

In the case of Costa Rica, access to ICSID system is extremely interesting: Costa Rica signed the ICSID Convention in September, 1981 but didn’t ratify it until 12 years later, in 1993. We read in a memorandum of GCAB (Global Committee of Argentina Bondholders) that Costa Rica`s decision resulted from direct United States pressure due to the Santa Elena expropriation case, which was decided in 2000 :
"In the 1990s, following the expropriation of property owned allegedly by an American investor, Costa Rica refused to submit the dispute to ICSID arbitration. The American investor invoked the Helms Amendment and delayed a $ 175 million loan from the Inter-American Development Bank to Costa Rica. Costa Rica consented to the ICSID proceedings, and the American investor ultimately recovered U.S. $ 16 million”.
). These subsidiaries have been developed so as to create a more and more tightly woven mesh.

Let us examine a theoretical example to understand the effects of this policy. The World Bank grants a loan to the authorities of a country on condition that the water purification and distribution system will be privatised. The public utility is therefore sold to a private consortium that includes the IFC, part of the World Bank.

When the people affected by the privatisation protest against the dramatic increase in rates and the reduction in the quality of services, and the public authorities turn against the predatory transnational company, the management of the dispute is entrusted to the ICSID, which is both judge and interested party. In most cases, the ICSID decides in favour of the large private company and rules that the State should pay it
damages and 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 situation is now such that the World Bank Group is present at every level:

  1. imposition and financing of the privatisation (World Bank via IBRD and IDA); investment in the privatised company (IFC);
  2. the guarantee given to this company to cover political risks (MIGA);
  3. judgement in the event of a dispute (ICSID).


[1This section is based on World Bank data (unless otherwise mentioned): World Bank, International Debt Statistics,

[2For an explanation of the HIPC Iinitiative and its various stages, see glossary (Heavily Indebted Poor Countries (HIPC) Initiative).

[3This section is based on International Monetary Fund data: IMF, IMF Executive Directors and Voting Power,

[4Source: International Bank for Reconstruction and Development,Voting power of executive directors, World Bank, 2013,

[5Source: International Bank for Reconstruction and Development, Subscriptions and voting power of member countries, World Bank, 2013, http://siteresources.worldbank.or

Eric Toussaint

is a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège, is the spokesperson of the CADTM International, and sits on the Scientific Council of ATTAC France.
He is the author of Greece 2015: there was an alternative. London: Resistance Books / IIRE / CADTM, 2020 , Debt System (Haymarket books, Chicago, 2019), Bankocracy (2015); The Life and Crimes of an Exemplary Man (2014); Glance in the Rear View Mirror. Neoliberal Ideology From its Origins to the Present, Haymarket books, Chicago, 2012, etc.
See his bibliography:
He co-authored World debt figures 2015 with Pierre Gottiniaux, Daniel Munevar and Antonio Sanabria (2015); and with Damien Millet Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. He was the scientific coordinator of the Greek Truth Commission on Public Debt from April 2015 to November 2015.

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Daniel Munevar

is a post-Keynesian economist from Bogotá, Colombia. From March to July 2015, he worked as an assistant to former Greek Finance Minister Yanis Varoufakis, advising him on fiscal policy and debt sustainability.
Previously, he was an advisor to the Colombian Ministry of Finance. He has also worked at UNCTAD.
He is one of the leading figures in the study of public debt at the international level. He is a researcher at Eurodad.

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