[DEBATE] : US NGOs Call on Congress to Require Changes in IMF Policies Before Any Gold Sale
MFleshman at aol.com
MFleshman at aol.com
Thu Jun 12 13:47:27 BST 2008
What am I missing here? I thought the idea was to shut the IMF down
US NGOs Call on Congress to Require Changes in IMF Policies Before Any Gold
Sales
US-based civil society groups are taking advantage of the most significant
opportunity in at least a decade -- and for the foreseeable future -- to
advocate for meaningful policy change at the International Monetary Fund (IMF).
This is a historic moment to work for an end to harmful policies supported by
the IMF that prevent countries from scaling up investments in health and
education. As middle-income countries have been paying off old loans and not
taking out any new loans in order to avoid the negative consequences of its loan
conditions, the IMF has been plunged into a financial crisis. Currently, the
IMF is proposing to sell some of the gold stock it holds to create a trust
fund, proceeds of which would be used to pay for the IMF's administrative
expenses. However, selling this gold requires authorization by United States
Congress, providing a unique point of leverage for civil society organizations in
the US.
In the recent letter to the US congress (pasted below), US NGOs are now
calling on Congress to only approve such gold sales if Congress first obtains
policy changes in the IMF’s loan conditions. At this stage, many Members of
Congress are focused on getting assurances from the IMF that it will address
other issues, such as transparency of so-called 'sovereign wealth funds' and the
valuation of China's currency. But many US NGOs feel it that it is vital that
people in the United States urge Congress to press for changes in the area
where the IMF policy-making role is by far the most significant: the policies
it continues to impose on poor countries. Links to background materials on
these matters follow the sign-on letter below.
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Dear Senators and Representatives,
Re: U.S. Civil society letter to Members of U.S. Congress on IMF gold sales
and scaling up investments in health and education
The International Monetary Fund (IMF) is seeking authorization from U.S.
Congress to sell some of its gold reserves for the purpose of funding the
institution’s future operations. The Bush administration has tentatively indicated
its support for IMF gold sales. We are writing to urge that before
authorizing gold sales, Congress insist on meaningful reforms in IMF policy in
developing countries and attach conditions to how gold sales will occur.
Over the last three decades, IMF policies have limited development
opportunities, and denied opportunity and decent livelihoods to hundreds of millions.
Instead, the IMF has leveraged its role as gatekeeper to international
capital flows to insist that poor countries adopt a narrow set of policies that
have limited possibilities for more expansionary economic growth and prevented
developing country governments from investing sufficiently in healthcare,
education and other vital needs.
As proposed, sale of IMF gold would be a one-time event, with the proceeds
used solely for funding of IMF operations and done in such a manner as to
likely preclude any future Congressional leverage over Fund activities, and
without any assurances or even promises of changes to long-standing failed and
harmful IMF policies.
If Congress is to authorize IMF gold sales, it should take advantage of the
opportunity to remedy these historic wrongs. Before Congress approves IMF
gold sales, it must ensure that proceeds are not used exclusively for
maintaining IMF staff. The gold held by the IMF is in essence a global public good.
If gold sales are to be approved, a significant portion of the proceeds
should therefore be devoted to the public good of alleviating global poverty. The
best way to do this would be to allocate proceeds towards debt cancellation.
Proceeds could be placed into a trust that could be used to cover protracted
arrears of countries soon to be eligible for debt cancellation under the
existing IMF/World Bank debt relief programs, or to fund future debt
cancellation for additional impoverished countries.
Congress should also condition its authorization of gold sales on whether or
not the IMF achieves the following specific and demonstrable changes in its
policy mandates and prescriptions for developing countries:
• The IMF must rescind the use of overly restrictive deficit-reduction and
inflation-reduction targets. Such targets prevent developing countries from
growing their economies and expanding public spending, including in the
critical areas of health and education. The IMF must not stand in the way of policy
makers in borrowing countries exploring and adopting more expansionary fiscal
and monetary policy options.
• Expanded health and education spending must be exempt from budget
ceilings. Budget and wage bill ceilings can undermine 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. The IMF has made some moves toward
eliminating wage bill ceilings, but maintains budget caps that limit overall
government spending flexibility. Expanded spending in the crucial areas of health
and education must not be subjected to these overall budget caps.
• Developing countries must be permitted to spend foreign aid for its
intended purposes. The IMF's own Independent Evaluation Office (IEO) finds as much
as 74% of additional foreign aid to 29 countries in sub-Saharan Africa
between 1999-2005 has been diverted from its intended purposes. Instead of being
spent on health, HIV/AIDS, and education, it has been allocated to domestic
debt payment and international currency reserves because of IMF policies
regulating monetary policies. While we understand that the establishment of strong
reserves can be a priority for a country, the decision of whether to use
foreign aid to build up reserves should be the government’s, made after public
discussion of the implications with civil society, the legislature, and other
stakeholders, with a clear analysis of the trade-offs involved.
• Debt cancellation must be de-linked from harmful economic policy
conditions, including overly restrictive deficit-reduction and inflation-reduction
targets, wage and budget caps that limit spending on health and education;
policies that lead to diversion of foreign aid from its intended purposes.
• Transparency and the right to access information must be strengthened at
the IMF. Disclosure of IMF draft policy papers, technical assistance reports,
and Executive Board documents—such as the minutes on Board meetings—is
imperative to facilitating informed participation by external stakeholders in
national economic decision-making and to ensuring citizens’ ability to hold their
governments accountable.
• Too often, poor borrower countries’ macroeconomic policies are
established through secretive deliberations by the IMF, and the Central Bank and the
Ministry of Finance. IMF practices must change to restore national, democratic
decision-making over policy-making. IMF Mission Teams that visit countries to
review loan agreements or conduct annual surveillance (Article IV reports)
must participate in explicit and open consultations with a wide range of
external stakeholders, not just with the Ministry of Finance and the Central Bank.
Stakeholders should include other relevant government ministries (including
health and education), independent economists and academic specialists,
national civil society and labor unions. These broad and meaningful consultations
should occur before a country’s macroeconomic policies are set.
Finally, we note that the IMF’s gold sales proposal suggests there would be
no subsequent sale of gold, and that the proceeds from this sale would enable
the Fund to be self-financing. Both of these matters require careful
Congressional review.
Given skyrocketing costs for oil, redressing developing country debt
problems and meeting Millennium Development Goal (MDG) objectives may require new
sources of funding in the future. There is no reason to preemptively commit to
not deploying the global public good of IMF gold for this purpose in the
future.
One consequence of the IMF becoming self-financing is that Congress would no
longer have meaningful leverage over its policies. Given the Fund's record,
and the importance of Congressional intervention to advance development
objectives in the past, we believe this arrangement merits, at least, very careful
review before it is put into place.
Sincerely,
ACT UP New York
ACT UP Philadelphia
ActionAid International USA
AFL-CIO
Africa Action
Africa Faith and Justice Network
African Services Committee
AIDS Project Los Angeles
American Friends Service Committee
American Jewish World Service
American Medical Student Association (AMSA)
American Public Health Association, International Health Section
Americans for Informed Democracy
Artists for a New South Africa
Bank Information Center
Center of Concern
Columban Justice, Peace and Integrity of Creation Office (USA)
Community HIV/AIDS Mobilization Project (CHAMP)
Dominican Sisters of Hope
East Timor and Indonesia Action Network (ETAN)
Essential Action
50 Years is Enough: U.S. Network for Global Economic Justice
Foreign Policy in Focus
Gender Action
Global AIDS Alliance
Global Action for Children
Global Exchange
Global Youth Coalition on HIV/AIDS (GYCA)
Haiti Reborn/Quixote Center
Harm Reduction Coalition
Health Alliance International
Health GAP (Global Access Project)
HIVictorious, Inc.
Holy Cross International Justice Office
Institute for Policy Studies, Global Economy Project
International Accountability Project
International Labor Rights Forum
InterReligious Task Force on Central America
Jubilee Montana Network
Jubilee Northwest Coalition
Jubilee Oregon
Jubilee San Diego
Jubilee USA Network
Jubilee Virginia
L.A. Gay & Lesbian Center
Leadership Conference of Women Religious
Maryknoll Global Concerns
Mennonite Central Committee U.S., Washington Office
Mercy Investment Program
Missionary Oblates of Mary Immaculate, Justice Peace/Integrity of Creation
Office
National Women’s Health Network
Nicaragua Center for Community Action (NICCA)
Nicaragua Network
North to South Aid
Northwest International Health Action Coalition (NIHAC)
The ONE Campaign (Make Poverty History)
Oxfam America
Partners in Health
People's Health Movement
Physicians for Human Rights
RESULTS, USA
San Francisco Bay Area Jubilee Coalition
School Sisters of Notre Dame – Global Justice & Peace Commission
School Sisters of Notre Dame – Milwaukee Provincial Council
Service Employees International Union (SEIU)
Sisters of Mercy Regional Community of Detroit
Sisters of the Holy Cross, Congregation Justice Committee
Sojourners-Call to Renewal
Stop HIV/AIDS in India Initiative (SHAII)
Student Campaign for Child Survival (SCCS)
Student Global AIDS Campaign (SGAC)
Student Trade Justice Campaign (STJC)
TransAfrica Forum
Treatment Action Group (TAG)
Unitarian Universalist Association of Congregations
United Methodist Church, General Board of Church and Society
Ursuline Sisters of Tildonk-U.S. Province
Vermont Global Health Coalition
WingSpan International USA
Witness for Peace
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NOTE: For background information on these issues, see:
Jubilee USA Network, "Recent Developments On IMF Gold Sales & Debt
Cancellation," February 2008,
_http://www.jubileeusa.org/fileadmin/user_upload/Resources/Policy_Archive/208briefnoteimfgold.pdf_
(http://www.jubileeusa.org/fileadmin/user_upload/Resources/Policy_Archive/208briefnoteimfgold.pdf)
Action Aid International, “Overview: Changing IMF Policies to Get More
Doctors, Nurses and Teachers Hired in Developing Countries,” March 2008.
_http://www.actionaidusa.org/assets/pdfs/imf_project/IMF_and_health.pdf_
(http://www.actionaidusa.org/assets/pdfs/imf_project/IMF_and_health.pdf)
Action Aid International, "Confronting the Contradictions: The IMF, wage
bill caps and the case for teachers," April 2007,
_http://www.actionaid.org/assets/pdf%5C1%20%20CONFRONTING%20THE%20CONTRADICTIO
NS%20E-VERSION.pdf_
(http://www.actionaid.org/assets/pdf\1%20%20CONFRONTING%20THE%20CONTRADICTIONS%20E-VERSION.pdf)
Action Aid International, "Changing Course: Alternative Approaches to
Achieve the Millennium Development Goals and Fight HIV/AIDS,” November 2005,
_http://www.actionaid.org.uk/doc_lib/131_1_changing_course.pdf_
(http://www.actionaid.org.uk/doc_lib/131_1_changing_course.pdf)
RESULTS Educational Fund, "The Budget Ceiling: Why Countries Can’t
Adequately Invest in Health Care and Education," updated May10, 2006,
_http://www.results.org/website/article.asp?id=2208_
(http://www.results.org/website/article.asp?id=2208)
RESULTS Educational Fund, ActionAid International USA, Global AIDS Alliance,
Student Global AIDS Campaign, and, "Blocking Progress: How the Fight Against
HIV/AIDS is Being Undermined by the World Bank and International Monetary
Fund," September 2004,
_http://www.actionaid.org/docs/77_1_blocking_progress.pdf_ (http://www.actionaid.org/docs/77_1_blocking_progress.pdf)
Center for Global Development (CGD), "Does the IMF Constrain Health Spending
in Poor Countries? Evidence and an Agenda For Action," July 2007,
_www.cgdev.org/content/publications/detail/14103_
(http://www.cgdev.org/content/publications/detail/14103)
Gerald Epstein, "Too much, too soon: IMF conditionality and inflation
targeting," Bretton Woods Project Update, September 2006,
_http://www.brettonwoodsproject.org/art-542599_ (http://www.brettonwoodsproject.org/art-542599)
European Network on Debt and Development (Eurodad), "World Bank and IMF
conditionality: a development injustice," June, 2006,
_www.eurodad.org/aid/report.aspx?id=130&item=0454_
(http://www.eurodad.org/aid/report.aspx?id=130&item=0454)
Global Transparency Initiative, "Transparency at the IMF: A guide for civil
society on getting access to information from the IMF," October 2007,
_www.ifitransparency.org/doc/Transparency_IMF_GTI.pdf_
(http://www.ifitransparency.org/doc/Transparency_IMF_GTI.pdf)
Independent Evaluation Office (IEO) of the IMF, "An Evaluation of The IMF
and Aid to Sub-Saharan Africa," 2007,
_http://www.ieo-imf.org/eval/complete/eval_03122007.html_
(http://www.ieo-imf.org/eval/complete/eval_03122007.html)
United Nations Development Program (UNDP), "Pro-Growth Alternatives for
Monetary and Financial Policies in Sub-Saharan Africa," Policy Research Brief
No.5, January 2008,
_www.undp-povertycentre.org/pub/IPCPolicyResearchBrief6.pdf_
(http://www.undp-povertycentre.org/pub/IPCPolicyResearchBrief6.pdf)
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