J2000: IMF winning battle over debt among G-8

[Robert Weissman <rob@essential.org>]

from www.jubilee2000uk.org

Jubilee 2000 Coalition condemns
    stalling tactics of G8 and calls for
    British Government to be ready to
    go it alone 

5/22/99

    (...)
     Reports of recent negotiations preparing for the Cologne communiqué
     have revealed a disturbing lack of progress on debt cancellation. Jubilee
     2000 campaigns around the world have forced creditors to respond to
     pressure. There has been much rhetoric on the need for "radical debt
     cancellation." However opponents of debt relief in the G8 seem to have
     had the upper hand in negotiating meetings taking place behind closed
     doors - and are using the opportunity to impose IMF austerity measures
     on the poorest countries. These reports are likely to add a new tone of
     anger to the Global Chain Reaction events taking place around the
     world at the beginning of June - in the run-up to the G8 Summit in
     Cologne. 

     Jubilee 2000 Coalition in the UK received the news from reliable
     sources inside the G8. They suggest that the proposals for the Summit
     will produce only meagre results for the world's poorest countries. The
     Summit communiqué is likely to increase the number of eligible
     countries (subject to good track records on IMF programmes) from 29
     to 40 and to marginally increase debt relief on offer. However creditors
     could not agree to assess the debt on more realistic terms, in particular
     through the use of criteria or formulae that would provide an exit from
     debt. The new proposals are therefore likely to only cancel debt that is
     anyway not being paid, and to deliver almost no new resources for
     investment in health and education. 

     The G8 leaders have also failed to address campaigners' demands for a
     new and transparent process for determining debt relief. 

     Indications are that the IMF has won the battle to maintain control of
     indebted economies through their structural adjustment programmes
     (SAPs). The proposal from the British and German governments that
     countries should obtain an exit from debt and IMF programmes after
     three years, has been defeated by the IMF. Instead countries will be
     offered debt relief after three years, but will still be required to
fulfil
     another three years of SAPs. If during this latter period they go
     “off-track”, then they will be penalised through the removal of earlier
     debt relief. In other words, relief will be used in a draconian way, to
     enforce IMF austerity programmes. 

     The IMF victory comes in the wake of continuing criticism of IMF
     policies from a wide range of sources. The crisis in South East Asia and
     Latin America unleashed a barrage of criticism of the IMF for its
     economic advice - which many believe has exacerbated the economic
     crisis in South East Asia and Latin America, and has led to rising levels
     of poverty and unemployment. Criticism has also come from within the
     World Bank, where the chief economist Joseph Stiglitz has condemned
     structural adjustment programmes (SAPs) as 'misguided' and 'neglecting
     ... fundamental issues'. 

     The news prompted anger amongst Jubilee 2000 campaigners in Britain.
     Ann Pettifor, Director of the Jubilee 2000 Coalition said: "The debt has
     been an unpayable burden on the poorest countries for decades now. It
     has shackled indebted governments to their creditors, represented by
     the IMF, and forced them to accept austerity programmes that harm
     their people, in particular the poor. And for all this time creditors have
     procrastinated and prevaricated, spinning out the economic pain through
     endless, costly re-scheduling. This news shows that the hard-faced
     financiers have won out again; and that creditors have failed to learn any
     lessons from history." 

     She added: "We want comprehensive, orderly debt cancellation by the
     Jubilee year, the year 2000. If western creditors continue to stall
     however, they will face a long period of campaigns for non-collection by
     individual creditor nations. This will lead to divisions within their
ranks,
     and possibly to further disorderly defaults. It is better for them to put
     things right now”.