PHA-Exch> 200+ Global Groups Demand IMF Policy Reform in Developing Countries Before Addressing Its Own Financial Crisis

[Claudio Schuftan]

From: Sarah Rimmington srimmington at essentialinformation.org


Washington, DC - On the eve of annual meetings of the International Monetary
Fund and World Bank that will focus on the global financial crisis, more
than 200 health, education, faith-based, labor and development organizations
from every region of the world are urging the IMF to change policies that
have restricted pro-development investments in health, education and
HIV/AIDS spending in developing countries before it sells some of its gold
reserves to address the institution's own financial crisis.

With many countries repaying their loans to the IMF and not seeking new
lines of credit to avoid further imposition of IMF policies, the
institution's traditional means of generating income is dwindling. Facing a
budget shortfall of $400 million in 2010, in April the IMF's Executive Board
tentatively approved a proposal to sell some of its gold reserves to create
an endowment whose proceeds will be used to support the IMF's administrative
budget. The plan cannot be implemented immediately because the U.S.
Executive Director to the IMF cannot vote in favor of gold sales without
prior approval from the U.S. Congress. This will delay implementation until
after the next U.S. administration takes office in 2009. In the meantime,
global civil society organizations wrote to the Executive Directors of the
Fund today, urging them to rethink the gold sales proposal and "insist on
meaningful pro-development reforms in IMF policy in developing countries,
and attach conditions to how gold sales will occur."

Signers of the letter include: Health Action International (HAI), The
International HIV/AIDS Alliance, International Association of the Sisters of
the Presentation, the People's Health Movement (PHM), AIDS and Rights
Alliance for Southern Africa (ARASA), The European Network on Debt and
Development (EURODAD), Jubilee South-Asia/Pacific, The Latin American and
Caribbean Movement of HIV-Positive People, The Latin American Network for
Economic Justice, ActionAid International USA, The Congress of South African
Trade Unions (COSATU), Essential Action (USA), Halifax Initiative Coalition
(Canada), Health GAP (USA), Jubilee USA Network, Kenya AIDS NGOs Consortium
(KANCO), National Union of Students of the Philippines, RESULTS Canada,
Japan, UK and USA, and Thai Network of People with HIV/AIDS (TNP+).

The letter identifies ways that IMF policies have prevented low-income
countries from building up their public health systems, undermining global
efforts to redress the HIV/AIDS pandemic and other critical health problems.

The letter explains that the IMF's "overly restrictive deficit-reduction and
inflation-reduction 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." It also notes that IMF-championed "budget and wage bill
ceilings have undermined impoverished countries' 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."

Before implementing gold sales, the letter urges, the IMF should change
these harmful policies. The letter recommends the following specific and
demonstrable changes in its policy mandates and prescriptions for developing
countries:

• The IMF rescind the use of overly restrictive deficit-reduction and
inflation-reduction targets;
• Exempting expanded health and education spending in developing countries
from IMF-imposed budget ceilings;
• Developing countries be permitted to spend foreign aid for its intended
purposes (currently, for countries not meeting IMF economic targets, the
Fund requires additional aid to be diverted to currency reserves or to pay
down debt);
• Debt cancellation must be de-linked from harmful economic policy
conditions;
• Transparency and the right to access information be strengthened at the
IMF; and
• IMF practices must change to ensure national, democratic decision-making
over policy-making.

The letter also urges that "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 civil society letter is available for
download at:
https://salsa.democracyinaction.org/o/1678/images/GlobalLetterFINAL.pdf
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