[stop-imf] Rep Saxton: Multilateral Debt of Poor Countries Should be Written Off

[robert weissman]

From: =09Debayani Kar <debi@jubileeusa.org>
To: =09jubilee-policy@yahoogroups.com

Joint Economic Committee chair Rep Jim Saxton put out the following
release today regarding the need for 100% cancellation of debt to IMF,
World Bank, and other multilateral creditors. This is a strong
Congressional statement in favor of 100% debt cancellation which revises
somewhat a previous statement by Rep Saxton which had opposed IMF gold
sales outright to finance debt cancellation. This is partially the
outcome of a meeting we had had with his staffer a couple of months ago.

Rep Saxton now gives conditional support for IMF gold sales if a
restitution mechanism is used: =93If there were a need to use the gold
held by the IMF for debt relief, restitution would be the right way to
do it."

Best,

Debi


http://www.house.gov/jec/press/2005/06-07-05.htm

*/For Immediate
Attention
June 7, 2005

/Multilateral Debt of Poor Countries Should be Written Off

*
    WASHINGTON, D.C. - A new study released today shows that the debt
owed by poor nations to the international financial institutions (IFIs)
can and should be written off immediately, Chairman Jim Saxton said. The
study demonstrates that existing financial reserves of the International
Monetary Fund (IMF) and the other major IFIs are already more than
sufficient to write off in full the multilateral debt owed by poor
countries. The study, The Debt of the Poorest Nations: A Gold Mine for
Development Aid, was written by Adam Lerrick of the Gailliot Center for
Public Policy at Carnegie Mellon University and the American Enterprise
Institute.

=93As I have said since 1999, the IMF and other IFIs should simply cancel
100 percent of the worthless debts owed them by poor countries,=94 Saxton
said. =93Their loans were based on mistaken policies that are now
discredited. In the case of the IMF, virtually all of these loans were
made without basic lending safeguards and accounting controls in place,
a mind-boggling fact uncovered by the Joint Economic Committee in 1998.
In addition, a characteristic lack of transparency also is reflected in
much of the debt relief planning currently under way.

=93As painstakingly documented in this new study, this lack of
transparency has the effect of veiling the shifting of costs of debt
relief away from the international financial institutions and toward the
taxpayers. Many billions of dollars of reserves are already held by the
IMF and the other IFIs that are available for debt relief. However, the
IMF gold sales under consideration would shield the IMF from bearing the
costs of its policy mistakes.

=93In the context of real IFI reform, and under the IMF=92s own
=91restitution=92 provisions, the gold held at the IMF could be returned to
the member countries from whence it came. As the study notes, after
restitution, the Fund=92s rich member countries could then opt to use an
equivalent amount of resources to support a facility providing
performance-based grants to the poorest countries.

=93If there were a need to use the gold held by the IMF for debt relief,
restitution would be the right way to do it. But in the interest of
transparency and accountability, let=92s be careful to distinguish between
debt relief and new aid. Otherwise, there is a tremendous risk that
failed policies will be repeated, and poor nations will be saddled again
with loans that they cannot repay,=94 Saxton concluded.

For more information on the IMF, please visit our website at
www.house.gov/jec <http://www.house.gov/jec> .

******
Debayani Kar
Communications and Advocacy Coordinator
Jubilee USA Network
222 E Capitol St NE
Washington, DC 20003
(202) 783-0215