Support McKinney Debt/IMF bill - organizational sign-on letter (fwd)

[Robert Weissman <rob@essential.org>]

The following is a sign-on letter in support of the new legislation on debt
cancellation and IMF restrictions being introduced by Rep. Cynthia McKinney.
50 Years is Enough and the Preamble Center are coordinating this effort.

If your organization would like to sign on, please do NOT hit the reply
button. Instead, send a note to signon@rtk.net <mailto:signon@rtk.net> and
indicate what city you're based in.

= = = = = = = = = = = = = = = = = = = = =


SUPPORT THE MCKINNEY DEBT CANCELLATION ACT

To: Members of the United States Congress

From: Organizations concerned about the Third World debt crisis and IMF
structural adjustment policies

Re: McKinney Debt Cancellation Act of 1999

Dear Member of Congress:

Representative Cynthia McKinney plans to introduce legislation which would
cancel the bilateral debt of poor countries to the United States and require
the International Monetary Fund to do the same as a condition of receiving
funds from the United States. More than a dozen Members have already agreed
to co-sponsor this legislation. We urge you to support this important
legislation by adding your name as a co-sponsor. Please contact Merwyn Scott
in Representative McKinney's office at 225-1605 to indicate your support.

It is now universally recognized that the external debts of the poorest
countries are unpayable. The international debt cancellation movement has
called for the annulment of these debts by the millennium, in accord with
the biblical call for cancellation of debt. Harvard economist Jeffrey Sachs,
director of the Harvard Institute for International Development, has
testified to the House Banking Committee that this call for debt
cancellation is reasonable and practical: the institutions which hold this
debt could easily absorb the cancellation, which would require a small
portion of their resources. Yet poor people in poor countries continue to
pay a heavy price for the continued effort by their governments to service
this debt, as hundreds of thousands of children die from preventable causes
due to the diversion of resources from health care and education to debt
service. The G7 has recently proposed a small improvement of the existing
debt initiative, but the G7 initiative is simply "tinkering around the
edges" as Sachs has said: it does not get rid of the debt, it does not free
up the needed resources for spending on health care and education, and it
leaves the IMF as "gatekeeper" to debt relief and in control of the
economies of the indebted countries.

The McKinney bill covers countries classified as heavily indebted poor
countries [HIPCs] by the World Bank, plus Haiti, the poorest country in the
Western Hemisphere. The nominal debt to the U.S. of these countries is about
$6 billion. Because this unpayable debt is worth far less than its nominal
value, under current budget rules it would only cost about $600 million to
cancel it. This represents less than 4% of the money that the U.S. gave to
the IMF last year -- money which went to bail out bankers, prop up
repressive regimes, and give the IMF leverage to impose brutal austerity
policies. Similarly, Sachs estimates $7.83 billion for the nominal debt owed
by HIPCs to the IMF, and shows how the IMF could easily absorb writing off
this unpayable debt, without any new resources from the United States or
other countries. The McKinney bill requires the IMF to write-off this debt
as a condition of future U.S. funding.

In his testimony Sachs called for the elimination of the IMF's Enhanced
Structural Adjustment Facility [ESAF]. This step is long overdue. As a
development model for poor countries, ESAF has been a failure, even as
measured by IMF goals. According to the IMF's own staff review, annual real
per capita GDP growth averaged 0.0% for countries with ESAF programs over
the period 1991-1995, whereas non-ESAF developing countries experienced, on
average, 1.0% annual real per capita GDP growth. African countries with ESAF
programs fared even worse, with an average annual .3% decline in real per
capita incomes over the period of IMF structural adjustment from 1991-1995.
At the same time the external debt burden of ESAF countries has grown larger
as a share of their economies. As Sachs pointed out, ESAF undermines
democracy by empowering the IMF to micromanage the governments of poor
countries -- a task which, as Sachs says, is "well beyond the IMF's mandate
and competence." We oppose any scheme to provide new funds to ESAF,
including the IMF's current plan to use gold sales for this purpose. The
McKinney bill requires the IMF to eliminate ESAF as a condition of future
U.S. funding.

Poor countries have languished under a crushing external debt burden and IMF
austerity for far too long. Finally the political moment has arrived when
something can be done about it. We urge you to co-sponsor the McKinney Debt
Cancellation Act. Thank you for your consideration.