Committee for the Abolition of Illegitimate Debt

A year ago 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 was on the nose, its credibility in tatters. Today it is the darling of the rich countries. They have agreed in principle to increase its funding massively, nominally by a trillion dollars. On Anzac Day, the first $US250 billion ($344 billion) was approved. Australia’s contribution to this will probably be about $US6.25 billion.

This is a remarkable turnaround. A year ago, one of the few subjects both sides of American politics agreed upon was that the fund had passed its use-by date. The left opposed it because of the harsh impact of its policies on the poor in developing countries. The right opposed it because of its demonstrated incompetence.

The IMF had misdiagnosed the Asian economic crisis in 1997 and prescribed contractionary policies for a crisis of confidence. Argentina faithfully followed the IMF’s advice for over a decade and then, in 2001, its economy imploded in the worst peace-time economic collapse in history.

Africa likewise followed the IMF’s advice for the decade to 2005, only to find its health-care Care Le concept de « care work » (travail de soin) fait référence à un ensemble de pratiques matérielles et psychologiques destinées à apporter une réponse concrète aux besoins des autres et d’une communauté (dont des écosystèmes). On préfère le concept de care à celui de travail « domestique » ou de « reproduction » car il intègre les dimensions émotionnelles et psychologiques (charge mentale, affection, soutien), et il ne se limite pas aux aspects « privés » et gratuit en englobant également les activités rémunérées nécessaires à la reproduction de la vie humaine. systems were privatised, and foreign aid flows had been redirected towards the repayment of foreign debt and into foreign exchange reserves, two policies which had disastrous results.

For 27 years, IMF policies have put the need for poor countries to service foreign debt ahead of their need to develop. Development has been subordinated to debt repayment.

So what happened? Has the IMF suddenly changed? Has it been reborn with new policies and perspectives? Have the needs of developing countries shifted?

No, no and no.

What has happened is the global financial crisis. The needs of rich countries have changed, specifically those of their financial sectors, not the needs of poor countries.

Poor countries need more help than ever because the crisis will hurt them the most, and the damage will last much longer than in the West. But more IMF loans are not the help poor countries need. It is the help the international banks need. For these funds will flow directly through the poor countries to the international banks.

This is a global stimulus package, just like Australia’s or China’s domestic packages, with the critical difference being that whereas most of Australia’s stimulus has been made available as grants to individuals or governments to spend, this package will be made available only as debt.

The rich countries, including Australia, are pumping resources into the IMF so it can lend the money to poor countries, which will add to the crippling debt burden they already bear.

Make no mistake, the worst of the global crisis is still before us. The Organisation for Economic Co-operation and Development 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/ predicts world trade will fall this year for the first time since 1945, and fall by more than 13 per cent. 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.

estimates that private capital flows to developing countries in the past two years have reversed by a staggering $700 billion a year.

This collapse in trade and capital flows will seriously damage the fragile economies of poorer countries.

These countries need aid to replace their collapsing export revenues. They need some of their unsustainable debt to be cancelled. And they need a fair deal in the current Doha trade round, which needs to be completed urgently so the severe contractions in global trade caused by the global financial crisis can, to some extent, be countered.

What they don’t need is more debt. More debt will only reduce their prospects for long-term growth.

Many emerging market nations have had huge difficulties servicing their foreign debt. Ukraine, Iceland, Latvia, Hungary, Armenia, Romania, Serbia and Pakistan have all recently been helped by the IMF to service their debts.

Now it has the funds to “assist” even more countries. And it proposes to “assist” these countries by lending them money on the condition they use it to repay the foreign debt that is due. These funds will flow directly through the debtor countries to the international banks - the assistance will be rendered to the lenders, not the debtor countries.

Nothing has changed. The IMF is doing what the rich countries that control its board want it to do: put the interests of international banks before the interests of poor countries.

In short, development is a crock. There are about 195 countries in the world. Fifty years ago, 27 of those countries were developed. Today 32 are. In 50 years, five countries out of about 170 have achieved the goal of development. That is an abysmal track record.

Development hasn’t worked, and there are many theories about why that is so. But when you understand why the rich countries are pumping resources into the IMF today, you begin to see why development has largely failed. The system is being operated to benefit the rich and powerful nations at the expense of the poor and powerless.

From the Sydney Morning Herald May 2, 2009http://www.smh.com.au/opinion/when-cashedup-imf-offers-to-help-steer-well-clear-20090501-aq4y.html?page=-1