[stop-imf] IMF, World Bank Economic Policies Still Undermining Health, Social Sector Budgets

[robert weissman]

Executive Summary of report is below the news release. Full report text
at jubileeusa.org

Jubilee USA Network * www.jubileeusa.org

FOR IMMEDIATE RELEASE
November 30, 2005

Contact:  Debayani Kar, 202-783-0215, 202-246-8143

On World AIDS Day, Jubilee USA Report Finds IMF, World Bank Economic
Policies Still Undermining Health, Social Sector Budgets

Jubilee Urges G-8, IMF, World Bank to De-Link Harmful Economic
Conditions From Debt Cancellation Agreed by World Leaders in July

WASHINGTON ? Ahead of World AIDS Day tomorrow, Jubilee USA Network today
released a brief report, Deadly Delays: How IMF/World Bank Economic
Policies Undermine Debt Cancellation, which analyzes economic policies
of the International Monetary Fund (IMF) and World Bank in four
countries: Zambia, Cameroon, Malawi, and Nicaragua. The report finds
that impoverished countries continue to face serious delays in receiving
debt cancellation due to their failure to implement controversial and
often harmful economic policies of the IMF and World Bank. Such one-size
fits all economic policies have undermined health and other social
sector programs that are urgently needed to help fight HIV/AIDS.

?Impoverished countries in Africa and Latin America are facing deadly
delays in receiving desperately needed debt cancellation. On World AIDS
Day, we are reminded of the urgency of the HIV/AIDS pandemic, which will
take the lives of more than 2 million people on the African continent
this year,? said Neil Watkins, National Coordinator of Jubilee USA
Network, the US arm of the global Jubilee campaign. ?Debt cancellation
is part of the solution to HIV/AIDS in Africa and elsewhere. Amidst the
pandemic of HIV/AIDS, it is unacceptable for the IMF and World Bank to
force impoverished nations to undertake controversial and often damaging
economic reforms before receiving debt cancellation.?

The Group of 8 (G-8) rich nations, with the support of the Bush
administration, reached an agreement this summer to cancel the debts of
18 countries to the IMF, World Bank, and African Development Bank, a
move Jubilee USA welcomed as an important first step towards addressing
the debt crisis faced by impoverished countries. However, for additional
countries to become eligible for cancellation, they must comply with a
series of harmful economic policy reforms mandated by the IMF and World
Bank: these conditions are the subject of Deadly Delays.

The report examines four case studies of the problematic policies that
countries are required to implement to receive multilateral debt relief
and cancellation. To qualify for debt cancellation, Nicaragua was
directed to privatize electricity with disastrous consequences. In
Zambia, the government?s health and education programs were compromised
by IMF-mandated spending restrictions. Cameroon is currently under
pressure to privatize its water system to qualify for full debt
cancellation while in Malawi, the country?s food crisis has been
exacerbated by the fiscal policies required by the IMF and advanced
under the Heavily Indebted Poor Countries (HIPC) Initiative.

To read the full report, ?Deadly Delays: How IMF and World Bank Economic
Conditions Undermine Debt Cancellation,? see www.jubileeusa.org.

Jubilee USA Network is the US arm of the international movement working
for debt cancellation for impoverished nations. Jubilee USA is a network
of over 70 religious denominations, labor groups, environmental
organizations, and community and advocacy groups working for freedom
from debt for countries in Africa, Asia, and Latin America.

---

Deadly Delays:  How IMF and World Bank Economic Conditions Undermine
Debt Cancellation

EXECUTIVE SUMMARY

The agreement reached by President Bush and other world leaders this
summer to cancel the  debts of 18 countries (including 14 in Africa) to
the International Monetary Fund (IMF), World  Bank, and African
Development Bank represents an important and precedent-setting step
towards addressing the debt crisis faced by impoverished countries. 1
The agreement would allow  up to 38 countries to eventually qualify for
debt cancellation. However, for any additional  countries to become
eligible for cancellation, they must comply with a series of harmful
economic policy reforms mandated by the IMF and World Bank. This policy
brief examines  these one-size fits all economic policies in four
impoverished countries in Africa and Latin  America. We find that IMF
and World Bank policy prescriptions and the delays they cause for  debt
cancellation cost lives, and should be abandoned.

The deal reached by (Group of 8) G-8 leaders this summer is to be
implemented under the  framework of the Heavily Indebted Poor Countries
(HIPC) Initiative of the IMF and World  Bank. In order to advance to the
final stage or =93completion point=94 in the Initiative in which 100%  debt
stock cancellation is possible, countries must comply with IMF and World
Bank economic  policies including Poverty Reduction Strategy Papers
(PRSPs) and other IMF and World Bank  loan instruments.

The economic policy reforms required by the PRSPs and other loan
instruments include  privatization of government-run services and other
entities, increased trade liberalization, and  budgetary spending
restrictions. Such policies have not been shown to increase per capita
income  growth or reduce poverty over the last twenty-five years in
which they have been carried out  throughout Africa and Latin America. 2
As a result, donors and international financial institutions  (IFIs) are
beginning to take a second look at the conditions that are tied to aid
and debt relief.  The UK, for example, has taken a position that future
aid will not be =93conditional on specific  policy decisions by partner
governments=94 including privatization or trade liberalization. 3

This policy brief provides four case studies of the problematic policies
that countries are required  to implement in order to receive
multilateral debt cancellation. Two of the countries examined by  this
study, Nicaragua and Zambia, have already implemented the required
reforms to reach  HIPC =93completion point=94 and should therefore obtain
debt cancellation under the G-8 debt deal  in 2006. Their stories offer
lessons for other countries. The other two, Cameroon and Malawi,  have
remained at =93decision point=94 since 2000, and must undertake additional
reforms to reach  completion point in the HIPC Initiative. They are
facing deadly delays. We call the delays deadly  because while countries
like Cameroon and Malawi are held up from receiving debt cancellation,
people in these countries are dying because of lack of access to health
care, to HIV/AIDS drugs,  and to clean water. UNICEF estimates that in
2003 alone 240,000 children were orphaned in  Cameroon due to their
parents dying of HIV/AIDS. 4

In Nicaragua, the government was directed by the IMF and World Bank to
privatize electricity  which resulted in the tripling of prices and
decreased access for the poor in a country where only  half the
population had electricity to begin with. Zambia=92s health and education
programs were  compromised by the IMF=92s macroeconomic policies which
focus on maintaining low inflation and strict budget ceilings,
preventing the government from spending the necessary amount to  fund
schools or HIV/AIDS programs. Cameroon is currently under pressure to
privatize its  water system to qualify for full debt cancellation,
despite evidence from many other countries  that water privatization
leads to increased costs and decreased access especially for the poor.
In  Malawi, the country=92s food crisis has been exacerbated by a
combination of IMF fiscal policy  and restructuring of the agricultural
sector. These four case studies are not isolated instances but  are
reflective of the experience of each country in the HIPC program.

It is critical that resources released by debt  cancellation reach those
who need it most. As a  result Jubilee USA Network works closely with
partner organizations in indebted countries to  assure accountability
and transparency. But while  we support accountability and transparency,
we do  not support the imposition of economic conditions  on
impoverished countries by the IMF and World  Bank as a condition of debt
cancellation.

We call on the US government, along with the IMF  and World Bank, to
provide 100% cancellation of the  debts of all impoverished countries
without requiring  those countries to implement harmful economic
conditions such as privatization of essential services and restrictive
social sector spending.  Especially for impoverished countries like
Cameroon and Malawi, delays to debt cancellation  cost lives.

1Jubilee USA Network, =93First Step on A Long Journey: Putting the G-8
Debt Deal into Perspective,=94 June 2005, for  a more comprehensive
analysis of positive elements and shortcomings of the G-8 debt agreement
and additional  recommendations for action. Available at
www.jubileeusa.org. This brief focuses specifically on economic policy
conditions.

2 See Mark Weisbrot and David Rosnick, Center for Economic and Policy
Research, =93The Scorecard on  Development: 25 Years of Diminished
Progress,=94 September 2005 and Branko Milanovic, Carnegie Endowment for
International Peace, =93Why Did the Poorest Countries Fail to Catch Up?=94
October 2005.

3 See UK Department for International Development, =93Partnerships for
poverty reduction: rethinking  conditionality,=94 March 2005, pp. 2,10;
and World Bank Operations Policy and Country Services Department,
=93Review of World Bank Conditionality,=94 September 2005.

4 UNICEF, Cameroon At-A-Glance, 2005.