September 18, 2000
The International Monetary Fund could write off 100% of the debts owed to it by the poorest countries, and finance this from its own resources, argues a new report from Jubilee 2000. "Shadowy Figures", published on the eve of the IMF and World Bank annual meetings in Prague, opens the books of the IMF, World Bank, Inter-American Development Bank and Asian Development Bank and concludes that all four could write off the poorest countries' debts without jeopardising their Triple A status. Currently, they are due to cancel about one third of the debts owed to them (32% in the case of the Bank and 37% for the Fund).
The report also documents the huge scale of the 'negative transfer' from poor countries to the IMF and the World Bank's commercial lending arm, the IBRD. From 1992-98, there was a net flow of $5.7 billion from the poorest countries to the IBRD and $1.06 billion to the IMF – over and above money given as new loans and credits. In order to balance these negative flows, these institutions drew on taxpayers' funds to channel new `soft' loans to the poorest countries, through the World Bank's IDA window.
The report looks at the effects of this transfer, such as the fact that aid, intended for development, is sometimes used for debt repayments to the international financial institutions. For example in 1999, Zambia spent 72% of total donor support on repaying external creditors. Ann Pettifor, Director of Jubilee 2000 and co-author of the report, said, "The G7 countries have all accepted that these debts are uncollectable, and pledged to write off 100% of the debts they are owed by the poorest countries. As major shareholders, why don't they tell the Bank and Fund to do the same thing? Private banks would be delighted with the level of reserves enjoyed by these state-backed institutions. The IMF and World Bank should face economic reality, and take a hair-cut, just as other creditors are doing."
"The miserly one-third cancellation currently on offer will still leave poor countries spending more on debt than on healthcare. The Bank and Fund can cancel 100% of the poorest countries' debt, and their G7 puppet-masters should make them do it," Ann Pettifor continued.
To see the full report, "The G7, IMF and World Bank - Globalisation and Debt" click here.
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