Response to Announcements at IMF/World Bank Annual Meetings

Note: The following statement was issued by the 50 Years Is Enough Network immediately after the conclusion of the IMF/World Bank Annual Meetings. It addresses three important announcements: 1) President Clinton's much-publicized pledge to cancel 100% of some debts owed by impoverished countries to the U.S.; 2) the IMF and World Bank‚s approval of a slightly-revised debt management program (HIPC); and 3) changes to the IMF‚s notorious Enhanced Structural Adjustment Facility (ESAF).

The analysis of Clinton's statement contained here remains the most complete we can do to date, given the absence of further official information from the Treasury Department.

Activists for economic justice around the world have expressed their alarm about the "new face" being applied to ESAF. In one of the most cynically Orwellian acts in memory, the IMF seems to have decided that what was once "structural adjustment" should now be called "poverty reduction"! While few seem to be taken in at this point, our task will be to make sure that the IMF, through its persistence, does not start to take in elected officials and other decision-makers with this blatant lie.

October 4, 1999

The 1999 Annual General Meetings of the International Monetary Fund (IMF) and World Bank concluded in Washington on Thursday, September 30. During the course of those meetings three announcements were made relevant to the top concerns of the 50 Years Is Enough Network.

1. President Clinton announced at the annual meetings, on September 29, that he would direct his Administration to "make it possible to forgive 100% of the debt" owed to the U.S. by the world's poorest countries. In this statement Clinton performed an important service by breaking the apparent taboo the U.S. had built up against considering 100% cancellation of bilateral debt. This is a very welcome step, and one that other countries should follow. (Canada had already taken this step in regard to certain indebted countries.) The President must immediately take steps to persuade other members of the G-7 and the Paris Club of creditor countries to match this level of debt cancellation. However, the President's statement is laced with several vague conditions, all of which remain to be clarified by the Treasury Department. Most alarmingly, it appears probable that bilateral debt cancellation will be made contingent on countries completing several years of IMF/World Bank structural adjustment programs. This is unacceptable, and does not meet the standard set by several debt relief bills in Congress, such as the Debt Emancipation for Emerging Democracies (DEED) Act of Rep. Cynthia McKinney (which the 50 Years Is Enough Network has endorsed) and the Debt Relief for Poverty Reduction Act of Rep. Jim Leach (which the 50 Years Is Enough Network does not support because of its approach to multilateral debt relief). Partners and colleagues from the Global South have frequently declared that debt relief tied to structural adjustment is a poisoned chalice.
   
   
2. The governors of the IMF and World Bank approved the G-7‚s "Cologne Initiative" reforming the Heavily Indebted Poor Countries (HIPC) Initiative, originally adopted in 1996 by the two institutions. The reforms make the terms of the debt management program slightly more generous, and contain a commitment to seeing that resources are directed to poverty-reduction. The fundamental structure of HIPC is not altered however: reductions in debt servicing are still contingent on countries completing up to six years of the harsh structural adjustment programs (SAPs) designed by the institutions ˜ the very policies that have exacerbated poverty in country after country and actually caused increased debt burdens for the last 20 years. The promise of debt relief offered by HIPC (including the revised version) is little more than a bribe to governments to keep them implementing destructive policies that benefit the wealthy and multinational corporations.
   
   
3. The IMF and World Bank announced a reform of the Enhanced Structural Adjustment Facility (ESAF), the IMF‚s program of concessional loans for indebted countries which agree to implement structural adjustment programs. The new program will be called the Poverty Reduction & Growth Facility. The institutions say the new system will make poverty reduction its central concern, although IMF staffers have already acknowledged that where the imperatives of reducing poverty conflict with the familiar economic orthodoxy, priority will go to ensuring macroeconomic standards. IMF officials have tried to emphasize that the World Bank will now be involved in designing the programs and the Bank‚s board will have to approve of each loan under the new facility. The World Bank‚s involvement is hardly the comfort the plan‚s designers appear to think it should be, particularly given the revelations in the September 24th Financial Times that an internal Bank study showed that the institution paid little or no heed to the effects of its own structural adjustment loans on the poor populations they would effect. Most alarming is the news that the IMF, which has caused so much poverty and suffering with its programs over the last two decades, will now be given a major role in designing, implementing, and overseeing poverty-reduction programs in the world‚s most impoverished countries. This reform, rather than representing a curtailment of the IMF‚s role in poor countries, instead promises a disastrous expansion of the institution‚s role in precisely the areas where it has demonstrated itself most incompetent.

The announcements made at the Annual Meetings reflect the urgency that the efforts of organizations like ours and the international Jubilee 2000 movement has imposed on G-7 leaders and the international financial institutions. Unfortunately, behind the rhetoric of each of the announcements, the ostensible recognition of the need for changes in debt policy and IMF programs is not translated into meaningful action. As a result, far from being a time when we can celebrate our achievements, this is a time for caution and action. Citizens and legislators alike may be lulled into believing that something has been accomplished, when in fact all that has been established are new rhetorical smokescreens designed to conceal the fact that business-as-usual, which means the continuing erosion of living conditions in the most impoverished countries, will be unaffected.