[mgj-discuss] ALERT: Stop IMF from Undermining Debt Cancellation

[basav at igc.org]

Damn. We had thought (legitimately) in July that debt cancellation for 18
countries - while only a very small step towards dismantling the neoliberal
order - was nevertheless a  positive step. 

Now the IMF is trying to undermine even the small gains we had made!

Original Message:
-----------------
From: Soren Ambrose soren at igc.org
Date: Wed, 14 Dec 2005 03:49:03 +0300 (GMT+03:00)
To: ifi-out at lists.riseup.net
Subject: [ifi-out] ALERT: Stop IMF from Undermining Debt Cancellation


[please circulate / sorry for cross-postings]

December 14, 2005 (Wednesday)

Solidarity Africa Network in Action (Kenya) * 50 Years Is Enough Network
(U.S.)

**ALERT: Debt Cancellation Plan to be Undermined to Expand IMF Power**

*IMF Set to Deny Cancellation to 6 of 18 Countries in Plan*

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 – go to
http://www.50years.org/cms/updates/story/315] 

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.

Arbitrary Conditions, Departing from Plan Adopted by IMF Board

According to the criteria which the IMF has decided, arbitrarily, to use as
“entry conditionality,” debt cancellation can be delayed if a country
is deemed to have faltered in its “macroeconomic performance,” ceased
to implement a poverty reduction strategy, or experienced problems with
“public expenditure management” 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
“entry conditionality,” 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 countries’ 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 IMF’s “hit list” 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) – 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 – 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
“program” or “arrangement.” 

While the cancellation promised to these countries is substantial, what
makes the G8’s 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 don’t 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
http://www.50years.org/cms/updates/story/316.









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