Jesse Jackson Jr., Friends of Earth Slam IMF Plan (fwd)

[Robert Weissman <rob@essential.org>]

http://www.csmonitor.com/durable/1999/06/17/fp11s3-csm.shtml

THURSDAY, JUNE 17, 1999 

OPINION

IMF 'scheme' for debt relief

Jesse Jackson Jr. and Brent Blackwelder

The world's leaders gathering in Germany this week for the Group
of Eight meeting will consider several proposals to ease the debt
burden of poor countries. One proposal being promoted by the
International Monetary Fund (IMF) and the US Treasury
Department is to sell off a portion of the IMF's huge gold reserves
to finance debt relief.

The need for debt relief has never been greater. Each man, woman,
and child in the third world owes about $400 to the West, a sum
greater than what many of them make in an entire year.

Sub-Saharan Africa owes $224 billion, 80 percent of the region's
GNP, and pays out more in debt repayments a year than it receives
in aid. The social and environmental consequences of this reverse
flow of money are staggering.

Since creditors demand US dollars or other "hard" currencies,
countries must export their way out of debt by accelerating the
exploitation of their natural resources. Debt also diverts scarce
resources from development needs such as health centers and
schools.

In 1996 the World Bank and IMF announced a bold new initiative
to reduce the debt of poor countries. Yet three years later, only
three countries, Bolivia, Uganda, and Guyana, have actually
received any debt relief. And a recently leaked report by the
institutions pointed out what many had already suspected: Their
much-vaunted plan to reduce debt may instead actually be
increasing the amount that some countries pay.

The IMF, with the support of the US Treasury Department, now
proposes to sell a portion of its huge gold reserves (currently worth
$29.25 billion) to finance debt relief. On the face of it, it merits
support. But, as with most such proposals, the details are the
problem.

While the IMF is ostensibly asking permission to fund debt relief,
only a small portion of the proceeds would go to debt relief. The
bulk of the money would go to expand the IMF's Enhanced
Structural Adjustment Facility (ESAF). ESAF provides low-interest
loans to poor countries. But in order to access these funds,
countries must agree to implement the harsh austerity programs that
have proven to be catastrophes in countries such as Russia and
Indonesia.

Using IMF gold sales to fund ESAF would make the program
self-financing and remove it from congressional scrutiny, thereby
eliminating leverage for badly needed IMF reform. In essence, the
IMF and the US Treasury Department are holding debt relief
hostage to a permanent ESAF. It would be the height of cynicism if
an effort to provide debt relief to the poor was instead hijacked by
an institution whose policies helped precipitate the crisis in the first
place.

  Jesse Jackson Jr. is a Democratic Congressman from Illinois.
Brent Blackwelder is president of Friends of the Earth, in
Washington.