From rob@essential.org Fri Sep 26 18:50:05 2008 From: rob@essential.org (robert weissman) Date: Fri, 26 Sep 2008 13:50:05 -0400 Subject: [stop-imf] Sign-on letters to end harmful IMF policies Message-ID: <48DD20CD.8000800@essential.org> Dear Friends, In advance of the upcoming annual meetings of the IMF and World Bank, two sign-on letters to the IMF=92s executive board are circulating. You may already have received one, or indeed both, of them. We are requesting that you consider endorsing both letters, which are pasted below. Although their purposes are similar, they are not identical. The deadline for both is Sunday October 5. One letter was initiated by a coalition of U.S.-based groups, is addressed to the IMF Board, but has an important secondary audience, the U.S. Congress, which will be a key player in the IMF=92s bid to secure funding to continue operations now that it has acknowledged a serious financial crisis of its own. In an unusual turn of events, congressional approval for the IMF=92s plan to sell some of its gold reserves for this purpose is required before the IMF board plan can go into effect. The letter calls for an end to harmful policies supported by the IMF that prevent countries from scaling up investments in health and education before implementing the gold sale. Thus, this letter puts the IMF on notice regarding civil society=92s agenda, and will be circulated widely among Members of Congress to encourage that body to condition approval of gold sales on serious reforms of the way the IMF does business. Members of Congress have indicated they want to see broad international support if they are to push for bold reforms at the IMF. Sign-ons for this letter should go to Sarah Rimmington, Essential Action, srimmington@essentialinformation.org by Sunday October 5, 2008. The other letter was initiated by Bretton Woods Project (UK) and encourages Finance Ministers and the IMF Board to shut down the Poverty Reducation & Growth Facility (PRGF), the source of IMF loans to low-income countries. The letter suggests that the remaining funds be handed over to a more suitable institution providing finance to the countries eligible for the PRGF. This letter specifically targets the upcoming review of IMF lending instruments, the first opportunity in some time to get high-level officials on the record about the IMF=92s main remaining avenue to push structural adjustment programs. Sign-ons for this letter should go to Peter Chowla at info@brettonwoodsproject.org by Sunday October 5. Thank you for playing a part in these unique opportunities to change the IMF. See both letters below: Letter #1 --- DRAFT and endorsements as of September 26, 2008 --- Dear Executive Director, Re: Preconditioning Gold Sales on Reform of IMF Policy in Developing Countries With many countries repaying their loans to the International Monetary Fund and not seeking new lines of credit, the institution=92s traditional means of generating income is dwindling. Facing a budget shortfall of $400 million in 2010, in April the IMF=92s Executive Board approved a proposal to sell some of its gold reserves. The revenue will be used to create an endowment whose earnings will assist in financing the institution=92s administrative budget. We are writing to urge that before the Executive Board implements gold sales, it insist on meaningful pro-development reforms in IMF policy in developing countries, and attach conditions to how gold sales will occur. Over the last three decades, IMF policies have limited development, and denied opportunity and decent livelihoods to hundreds of millions. The IMF has leveraged its role as gatekeeper to international capital flows to insist that poor countries adopt a narrow set of macroeconomic policies. These policies have limited possibilities for more expansionary economic growth and prevented developing country governments from investing sufficiently in healthcare, education and other vital needs. As proposed, sale of IMF gold would be a one-time event, with the proceeds used solely to fund IMF operations, and without any assurances or even promises of changes to long-standing failed and harmful IMF policies. If the IMF Executive Board is to proceed with gold sales, it should take advantage of the opportunity to remedy these historic wrongs. The proceeds from gold sales must not be used exclusively to maintain IMF staff= . The gold held by the IMF is in essence a global public good. If gold sales are to be implemented, a significant portion of the proceeds should be devoted to the public good of alleviating global poverty. The best way to do this would be to allocate proceeds towards debt cancellation. Proceeds could be placed into a trust that could be used to cover protracted arrears of countries soon to be eligible for debt cancellation under the existing IMF/World Bank debt relief programs, or to fund future debt cancellation for additional impoverished countries. Gold sales should not be permitted before the IMF achieves the following specific and demonstrable changes in its policy mandates and prescriptions for developing countries: * The IMF must rescind the use of overly restrictive deficit-reduction and inflation-reduction targets. These contractionary targets prevent developing countries from boosting their economic growth by expanding long-term public investments through deficit spending in key public sectors, such as the critical areas of health and education. The IMF must not continue to stand in the way of policy makers in borrowing countries exploring and adopting more expansionary fiscal and monetary policy options. * Expanded health and education spending must be exempt from policies that unduly constrain overall government spending. Budget and wage bill ceilings have undermined impoverished countries=92 ability to provide adequate salaries for health and education workers, hire additional needed health workers and teachers, and scale up and improve the quality of the health and education sectors. The IMF has made some progress toward eliminating wage bill ceilings, but it still maintains budget caps that limit overall government spending flexibility. * Developing countries must be permitted to spend foreign aid for its intended purposes. Instead of being spent on health, HIV/AIDS, and education, large percentages of foreign aid have been allocated to domestic debt payment and international currency reserves because of IMF policies regulating monetary policies. While we understand that the establishment of strong reserves can be a priority for a country, the decision of whether to use foreign aid to build up reserves should be the government=92s, made after public discussion of the implications with the legislature, civil society, and other stakeholders, with a clear analysis of the trade-offs involved. * Debt cancellation must be de-linked from harmful economic policy conditions, including overly restrictive deficit-reduction and inflation-reduction targets, wage and budget caps that limit spending on health and education; and policies that lead to diversion of foreign aid from its intended purposes. * Transparency and the right to access information must be strengthened at the IMF. Disclosure of IMF draft policy papers, technical assistance reports, and Executive Board documents=97such as the minutes on Board meetings=97is imperative to facilitating informed participation by external stakeholders in national economic decision-making and to ensuring citizens=92 ability to hold their governments accountable. * IMF practices must change to ensure national, democratic decision-making over policy-making. The operational process of IMF Mission Teams that visit countries to review loan agreements or conduct annual surveillance (Article IV reports) must facilitate open and informed consultations with a wide range of external stakeholders, not just with the Ministry of Finance and the Central Bank. Stakeholders should include other relevant government ministries (including health and education), independent economists and academic specialists, national civil society and labor unions. These broad and meaningful consultations should occur before a country=92s macroeconomic policies are set. Finally, we note that the IMF=92s gold sales plan indicates there will be no subsequent sale of gold. Given skyrocketing costs for food and oil and the current global financial turmoil, redressing developing country debt problems and meeting Millennium Development Goal (MDG) objectives may require new sources of funding in the future. There is no reason to preemptively commit to not deploying the global public good of IMF gold for this purpose in the future. Sincerely, [List in Progress] Action Aid International USA Africa Action, Washington, DC, USA American Medical Student Association Association AIDES, France Bank Information Center, Washington, DC, USA Centre for Civil Society Economic Justice Project, University of KwaZulu-Natal Durban, South Africa Centre for Human Rights and Development, Mongolia Centre for Safety and Rational Use of Indian Systems of Medicine Ibn Sina Academy of Medievel Medicine & Sciences Aligarh, India CODESEN (Coordination of Civil Society Organizations for the Environmental Protection and the Development of the Senegal River Basin), Dakar, Senegal CRBM (Campaign to Reform the World Bank), Italy Economic Justice and Development Organization (EJAD), Pakistan EMPOWER, India Essential Action, Washington, DC, USA European AIDS Treatment Group (EATG), Brussels, Belgium Food and Water Watch, USA Forum for Biotechnology & Food Security, New Delhi, India Gender Action, Washington, DC, USA Ghana Coalition of NGOs in Health, Accra, Ghana Ghana Trade and Livelihood Coalition (GTLC), Accra, Ghana Global Action for Children, Washington, DC, USA Global AIDS Alliance, Washington, DC Global Campaign for Education, Washington, DC USA Global Exchange, San Francisco, CA, USA GrassRootsAfrica, Accra, Ghana Health Alliance International, Seattle, WA, USA Health GAP (Global Access Project), Philadelphia, PA, USA Health and Human Rights programme, School of Public Health and Family Medicine Health Sciences Faculty, University of Cape Town, South Africa Holy Cross International Justice Office, Notre Dame, IN, USA Initiative for Community Development , Nigeria Institute for Justice & Democracy in Haiti, Joseph, OR International Labor Rights Forum, Washington, DC, USA International Presentation Association Justice Network India International Presentation Association of the Sisters of the Presentation New York, NY, USA The Irish Missionary Union Jubilee San Diego Jubilee USA Network Kenya AIDS NGOs Consortium (KANCO) Kenya Debt Relief Network (KENDRAN) Labour,Health and Human Rights Development Centre, lhahrdev, Lagos, Nigeria Madhya Pradesh Vigyan Sabha (MPVS), Bhopal, India Maryknoll Office for Global Concerns, USA Medical Mission Sisters, Sector North America Notre Dame de namur Justice and Peace Network, USA Nyaya Health, Achham, Nepal The Oakland Institute, Oakland, CA, USA Plate-forme ha=EFtienne de Plaidoyer pour un D=E9veloppement Alternatif (PA= PDA) Port-au-Prince, Ha=EFti Partners In Health, Boston, MA, USA Physicians for Human Rights, USA Positive Malaysian Treatment Access & Advocacy Group (MTAAG+). Presentation Congregation Presentation Justice Network, Ireland RESULTS JAPAN RESULTS UK RESULTS USA Sisters of the Holy Cross, Congregation Justice Committee, USA Social Development Network, Kenya TransAfrica Forum, Washington, DC, USA Treatment Action Group (TAG), New York, NY, USA United Belize Advocacy Movement (UNIBAM) United Methodist Church, General Board of Church and Society, Washington, DC, USA World Development Movement, London, UK Youth Development Forum (YODEFO), Kampala, Uganda Youth In Action, Sierra Leone Letter # 2 from Bretton Woods Project: 30 September 2008 Ministers of Finance IMF Executive Directors Re: IMF Review of Lending Instruments, Facilities, and Policies It is time to seriously re-think the role that the IMF should be playing in low-income countries. The Executive Board=92s plan to review all the Fund=92s lending instruments and facilities over the next few months presents an opportunity to do so. The IMF has come under serious criticism both internally and externally about its focus and role in low income countries. The Malan Committee highlighted the inappropriate role the Fund is playing in low-income countries, overstepping its traditional role of addressing short term balance of payment crises to act as a development financier, even though it is not a development institution. The report concluded that =93the Fund=92s financing in low-income countries is an area where it has moved beyond its core responsibilities.=94 The Independent Evaluation Office (IEO) of the IMF has highlighted problems with both the structural and macroeconomic conditions in PRGF countries. The IEO report released in January 2008 highlighted the lack of progress on reducing conditionality. Despite this, the first annual report on structural conditionality shows that it has increased rather than decreased. The 2007 IEO report demonstrated that PRGF programs largely replicate the conditions attached to the "structural adjustment" lending which has been so heavily criticized. While the Fund may have a role to play in addressing short-term balance of payments problems, it is clearly not equipped to act as a long-term development lender in low-income countries. Conditionality included in PRGF programs constrains the domestic policy space needed by countries to develop innovative economic policies best suited to create growth and reduce poverty in their specific country contexts. It also undermines the accountability of borrowing governments, who blame IMF conditions for the lack of investment in their social sectors. The IMF Board should take the necessary steps to insure that the planned review of the PRGF is rigorous and broad. We believe that any comprehensive examination is likely to echo past recommendations for a sharp curtailment or closure, given the IMF's lack of development expertise and apparent inability or disinclination to limit the use of conditionality. We call on you to close the PRGF to new requests. The funds remaining in the PRGF Trust should be shifted to other institutions and other forms of development assistance, implying no net decrease in resources available to low-income countries. With new resources available to low-income countries from debt relief and scaled-up aid, now is the time to make sure that the international financial architecture meets the serious challenges faced by low-income countries. That calls for new thinking about the IMF=92s role. The undersigned organisations (and individuals) urge you to use the IMF=92s facility review to do just that. Signed (as of 11 September 2008): Organisations 1. African Network on Debt and Development (AFRODAD) 2. Bretton Woods Project, UK 3. Halifax Initiative, Canada 4. CRBM, Italy 5. Treatment Action Group, USA 6. Social Justice Committee, Canada 7. Zimbabwe coalition on Debt and Development, Zimbabwe 8. Ecumenical Support Services, Zimbabwe 9. People's Alliance for Debt Cancellation (GARPU), Indonesia 10. Jubilee Debt Campaign, UK 11. IRPAD/Afrique, Mali 12. Jubilee Scotland, UK 13. Jubilee USA 14. Kenya Debt Relief Network, Kenya 15. Christian Aid, UK 16. ActionAid International 17. Jubilee Zambia 18. Africa 2000 Network Foundation, Zimbabwe 19. Center of Concern, USA 20. Global Exchange, USA 21. Maryknoll Office for Global Concerns, USA 22. A SEED Europe, Netherlands 23. Zimbabwe Coalition on Debt and Development (ZIMCODD) 24. Plan B, UK 25. MWENGO, Zimbabwe Individuals 1. Oscar Ugarteche 2. Dennis Brutus