6 February 2012 by CADTM
The Committee for the Abolition of Third World Debt (CADTM) has decided to downgrade the IMF
International Monetary Fund Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.
When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.
As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).
The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.
http://imf.org ’s rating due to this institution’s heavy share Share A unit of ownership interest in a corporation or financial asset, representing one part of the total capital stock. Its owner (a shareholder) is entitled to receive an equal distribution of any profits distributed (a dividend) and to attend shareholder meetings. of responsibility for the deterioration of people’s living standards in countries subjected to austerity policies it has openly imposed or dictated from behind the scenes. The resulting high levels of unemployment, aggravation of the crisis and the increase in public debt of the States following its counter productive and unjust recommendations justify downgrading the IMF’s rating from NNN to NO- with a further very negative outlook.
The IMF was very active in the Global South since the 1980’s and into the 2000s, imposing structural adjustment
Economic policies imposed by the IMF in exchange of new loans or the rescheduling of old loans.
Structural Adjustments policies were enforced in the early 1980 to qualify countries for new loans or for debt rescheduling by the IMF and the World Bank. The requested kind of adjustment aims at ensuring that the country can again service its external debt. Structural adjustment usually combines the following elements : devaluation of the national currency (in order to bring down the prices of exported goods and attract strong currencies), rise in interest rates (in order to attract international capital), reduction of public expenditure (’streamlining’ of public services staff, reduction of budgets devoted to education and the health sector, etc.), massive privatisations, reduction of public subsidies to some companies or products, freezing of salaries (to avoid inflation as a consequence of deflation). These SAPs have not only substantially contributed to higher and higher levels of indebtedness in the affected countries ; they have simultaneously led to higher prices (because of a high VAT rate and of the free market prices) and to a dramatic fall in the income of local populations (as a consequence of rising unemployment and of the dismantling of public services, among other factors). plans in favour of creditors: drastic reductions in social spending, massive privatisations, deregulation of the economies and the local markets favouring multinationals rather than local producers. The recipe has been unsavoury.
Totally de-legitimised by the social failures of its poisonous remedies, the IMF found itself bordering on bankruptcy during 2007 - 2008 as most of its principal debtors made advance repayments to free themselves from the IMF’s burdensome supervision.
Thanks to the present crisis the IMF has managed a come-back in Europe. Back in the saddle with the assistance of the G20 G20 The Group of Twenty (G20 or G-20) is a group made up of nineteen countries and the European Union whose ministers, central-bank directors and heads of state meet regularly. It was created in 1999 after the series of financial crises in the 1990s. Its aim is to encourage international consultation on the principle of broadening dialogue in keeping with the growing economic importance of a certain number of countries. Its members are Argentina, Australia, Brazil, Canada, China, France, Germany, Italy, India, Indonesia, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, USA, UK and the European Union (represented by the presidents of the Council and of the European Central Bank). summits, the IMF has multiplied its lending to Greece, Ireland and Portugal, which, in their difficult situation, are forced to compensate by the implementation of brutal and unjust austerity measures.
The same causes produce the same effects, Europe has now been affected but fortunately the people are not just letting it happen. Even if the IMF wants to make the most of its thirty years of unequalled experience in the safeguarding of private financial interests to the detriment of the people, the emergence of citizens’ public debt audit groups in numerous countries have led the CADTM to downgrade the IMF’s rating and to issue a serious warning. We hope that these citizen resistance movements against an institution that is increasingly unpopular and illegitimate, will very soon incite us to downgrade this rating even further.
The CADTM insists on the immediate abolition of the IMF and its replacement by a radically different and democratic institution focused on the satisfaction of fundamental human needs.
Translated by Mike Krolikowski in collaboration with Judith Harris
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