By Larry Elliott
The Guardian
April 4, 2011
Campaigners say IMF's $2.6bn windfall is perfect opportunity to cancel poor countries' debts
Development groups have called on western governments to use $2.6bn (£1.6bn) from the sale of International Monetary Fund gold to finance a new wave of debt relief for the world's poorest nations.
The IMF's board will meet in Washington on Wednesday to discuss what it should do with the profits raised from disposing of just over 400 metric tonnes of gold, one eighth of the IMF's total stock of the precious metal.
When it announced the sell-off in September 2009, the IMF said the move was an important step in putting its finances on a "sound long-term footing". It added that important components of the strategy would be the creation of an endowment and a boost to concessional lending to developing nations.
Tim Jones, policy officer at the Jubilee Debt Campaign, urged the big western shareholders that dominate decision-making at the IMF to use the money for debt relief.
"The IMF is doing very well out of the economic crisis it helped to create, with a windfall from gold sales and profit from lending," Jones said. "Yet, many poor countries have been forced into debt through no fault of their own, whether due to disasters or the financial crisis caused by western banks. The IMF should use its excess money to cancel such debts."
He said a total of 58 civil society organisations and networks from across the world have written to the governments that control the IMF, calling on them to use the windfall to cancel poor countries' debts. Signatories include Oxfam International, the International Trade Union Confederation, Action Aid International, Cafod, Save the Children and the World Development Movement.
Collins Magalasi, executive director of the African Forum and Network on Debt and Development, said: "This is a long awaited opportunity for the IMF to cancel poor countries' debts. The IMF has always said it lacks the money to be able to write off the debts of these poor countries. Now that there is an excess, it is only logical to use this money to cancel debts that are further crippling poor economies. For most African countries total foreign debt is a third of earnings from exports."
Campaigners said Sierra Leone was an example of a poor country that had seen its debts increase as a result of the financial crisis. They said Sierra Leone's debt to the rest of the world had doubled in recent years and in 2011, more of the government's revenue would be spent on debt repayments than on healthcare.
