ALERT : Debt Cancellation Plan to be Undermined to Expand IMF Power
IMF Set to Deny Cancellation to 6 of 18 Countries in Plan
Multiple highly reliable sources have confirmed that the IMF board is scheduled to meet on December 21 (Wednesday) to consider country-specific recommendations made by IMF staff on implementation of the 100% debt cancellation plan proposed by the G8 this summer and approved at the September annual meeting. These sources indicate that, using processes and logic outlined in documents published on its website last week, IMF staff will recommend that six of the 18 countries eligible for immediate cancellation be denied.
Contact Finance Ministries and IMF Executive Directors !
For a more complete analysis of IMF documents which supports the call in this alert : an update of an analysis circulated on Dec. 9
Arbitrary Conditions, Departing from Plan Adopted by IMF Board
According to the criteria which the IMF has decided, arbitrarily, to use as âentry conditionality,â debt cancellation can be delayed if a country is deemed to have faltered in its âmacroeconomic performance,â ceased to implement a poverty reduction strategy, or experienced problems with âpublic expenditure managementâ since it completed the HIPC program. (The G8 proposal makes cancellation available only to countries that have completed HIPC.)
The debt cancellation plan adopted by the board makes no provision for âentry conditionality,â specifying only that countries should have kept up their debt payments since their graduation from HIPC. IMF staff, however, has twisted language in the original proposal to assert that a need for entry conditions is implied.
Refusing to Let the Economic Empire Die
The IMF is fabricating a need for new conditions in order to ensure that it maintains control over Southern countriesâ economies. Full cancellation would allow governments that choose not to sign up for a new IMF program to free themselves from IMF oversight and conditions. Though many face similar conditions from other creditors, the IMF is the most powerful because it determines, for nearly all aid agencies and financial institutions, which countries can be considered creditworthy (and grant-worthy). It is the linchpin of the oppressive debt system.
The six countries reported to be on the IMFâs âhit listâ are Ethiopia, Madagascar, Mauritania, Nicaragua, Rwanda, and Senegal.
The first four in that list of six are also on another important list (provided by the IMF in its longer documents) â“ countries that are eligible for immediate debt cancellation but which either do not have current IMF programs or have programs that will expire before the end of 2005. Only five of the 18 eligible countries fall into this no-IMF-program category. The only one of those five that the IMF has not signaled it wants to block is Uganda â“ which recently indicated its interest in taking up a new IMF program (the PSI, discussed in our longer analysis).
So, if the IMF succeeds in blocking these six countries from getting debt cancellation, that will mean that no country without an IMF program will qualify.
Although the IMF will no doubt offer some logic for excluding each of the countries, the fact is that the IMF is serving as police force, prosecutor, judge, and jury for this program, and need not submit its reasoning to public examination. For those reasons, we cannot *prove* that the IMF has manufactured its criteria and its conclusions in order to insure that every country receiving cancellation will be committed to an IMF program. The evidence, we think, makes it hard to argue that the close match between the list of countries to be excluded and the list of countries without an IMF program is a mere coincidence.
Our longer analysis concludes that, in addition to the pattern established above, the IMF is preparing to claim that no country can get debt cancelled unless it has an in-force Poverty Reduction Strategy Paper (PRSP) approved by the IMF and World Bank. The IMF is likely to claim that the PRSP, despite routinely containing commitments to IMF policies, and requiring approval from both the IMF and World Bank, is not technically an IMF âprogramâ or âarrangement.â
While the cancellation promised to these countries is substantial, what makes the G8âs debt deal a truly important break from business-as-usual is that it allows HIPC governments determined to free themselves from the IMF to do exactly that. If the IMF is allowed to establish a pattern of denying cancellation to any country it does not control, that possibility will remain out of reach.
TAKE ACTION :
Tell Your Government to Make the IMF Stop Playing Games with the Debt Cancellation that has been Promised
Activists have the power to expose this maneuver and to reverse it. The high profile of the debt deal this year means governments and the IMF itself know debt cancellation has wide public support, and that they will come under attack if they are seen to be blocking it.
Please contact your Finance Ministry and your representative to the IMF board. (In this case, Southern country governments and board members can have a valuable influence, so donât assume that only Northern country citizens have a voice in this.)
Tell them you know that the IMF is subverting the G8 debt cancellation deal that was approved by the boards of the IMF and World Bank. By employing obscure and ambiguous rules, the IMF is attempting to conceal the fact that it will not tolerate any country trying to break free from its tyranny over economic policy.
Thank you !
For a list of IMF board members and some contact information for them, please see the version of this alert posted at www.50years.org/cms/updates/story/316.