[stop-imf] IMF Policies Said To Encourage Timber Exploitation

[Robert Weissman]

Greenwire
January 30, 2002

IMF: POLICIES SAID TO ENCOURAGE TIMBER EXPLOITATION

Brian Stempeck, Greenwire staff writer

    The International Monetary Fund pressures heavily indebted
countries into undertaking excessive deforestation, an
environmental group reiterated Wednesday. Though the IMF denies
the charges, other studies have also said the lending agency
could stand to reform its policies, and environmentalists now
want the U.S. Congress and Treasury Department to intervene.

    Released yesterday by American Lands, The IMF: Funding
Deforestation says forest losses in 15 countries in Africa,
Latin America and Asia are the direct result of several damaging
policies. When the IMF pressures countries to reduce their
budgets, environmental programs are often the first to go, it
said. In Brazil, for example, the Pilot Program for the
Conservation of Brazilian Tropical Forest was cut to one-third
of its previous funding, said American Lands. IMF policy
mandates in Russia led to the government cutting its protected
forests budget by 40 percent, leading to "rampant illegal
logging, including a system of forged logging licenses, timber
certificates, and export papers widely available on the black
market," the group said.

   The report is also critical of IMF policies encouraging
export-led growth and increases in foreign investment with no
consideration of environmental effects. In Cameroon, the number
of logging firms operating increased from 177 to 479, and lumber
exports increased by 50 percent between 1995 and 1997.
"Currently, over 75 percent of the country's forest cover has
been or is scheduled to be logged," the group said.

   "An IMF loan to Nicaragua in 1994 was conditioned upon the
expansion of the country's forestry sector," said the report,
and as a result, "Forestry grew from 1.5 to 3.2 percent of the
GDP [gross domestic product] in 3 years." Combined with cuts to
Nicaraguan forest protection programs, the study said,
deforestation vastly increased the detrimental effects of
Hurricane Mitch, when "terrible mudslides and flooding killed
6,000 people and caused billions of dollars in damage, due in
part to rapid rainfall runoff and erosion from the deforested
landscape."

   The report calls on Congress to pressure the Treasury
Department to oppose IMF loans or policies that lead to
excessive deforestation, and says the IMF should conduct
environmental and sustainability assessments of all loans.
American Lands also says the IMF should make more of its actions
known to the public.

   IMF officials dismissed the report's findings. "It looks
pretty specious," said spokesman Bill Murray, who said the
report was inaccurate and was the obvious product of an advocacy
group. "It ignored clear examples where IMF stepped in because
of deforestation," said Murray. The IMF halted lending to
Cambodia, for example, due to the country's damaging forest
practices, he said.

   A report from the World Resources Institute published in
2000 found that the World Bank and IMF have had a positive
impact on forest management in a handful of countries where
conditions were right for reform. In Indonesia and Papua New
Guinea, loans with forest-related conditions were able to
dismantle timber monopolies and rein in rampant logging,
according to WRI.

   Jason Tockman of American Lands, the report's author,
acknowledged that there were a handful of examples where IMF
policies were beneficial to forests, but said the overwhelming
majority of IMF programs studied were found to have negative
effects.

   Friends of the Earth released a similar report about IMF,
suggesting the agency needs to tie environmental standards to
its loans. "Though the IMF is not an environmental institution,
its role in setting economic stabilization and structural
adjustment policies means that it has a major impact on the
environment," said the FOE report, The IMF: Selling the
Environment Short.

   Past efforts at reform "haven't made a lot of progress,"
said Carol Welch, deputy director of international programs at
FOE. "They have responded to critiques in transparency and
availability," she said. Though the IMF has publicized the
details of its health and education-related spending, it still
does not release spending figures related to environmental
matters, she said.

   "We've called on them to push for environmental and social
assessments to determine whether a loan will lead to
deforestation," said Welch. "We haven't gotten very far with
them." But with International Development Association meetings
coming up -- IDA is a branch of the World Bank that provides
funding to the poorest of the developing countries -- there will
likely be a new push on the Treasury Department to call for IMF
reform, said Welch. She said Reps. George Miller and Nancy
Pelosi, both California Democrats, have expressed interest in
the subject.