High time to free nation of IFIs’ influence

20 December 2009 by The New Nation (Bangladesh)

Economists at a workshop yesterday said that it was the high time to free the nation from the influence of International Financial Institutions (IFIs) including World Bank World Bank
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

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.

upholding sovereignty in policy making.

Suggestions of the IFIs’ are always anti-people and countries like Bangladesh have incurred irreparable loss in different sectors by pursuing their policies, the experts and eminent citizens said.

The two-day third South Asian Workshop on ’International Financial Institutions (IFIs) and Debt’, was jointly organised by South Asia Alliance for Poverty Eradication (SAAPE), Institute of Environment and Development (IED) , CADTM international network (www.cadtm.org) and Vikas Adhyayan Kendra (VAK) at YWCA auditorium here.

Justice Golam Rabbani inaugurated the opening session of the workshop while director of India-based VAK Ajit Muricken was in the chair. Delegates from India, Pakistan and Belgium took part in the inaugural session of the international workshop with SAAPE Bangladesh Chapter focal person Rokeya Kabir moderating.

Economist Prof Anu Mohammad presented a keynote paper on IFIs and their impact in Bangladesh while economist Prof. Dr MM Akash on the global economic crisis. Eric Toussaint of Belgium-based Committee for Abolition of Third World Debt presented another paper on the global economic crisis.

Justice Golam Rabbani said the debt burden by World Bank and IMF is causing immense sufferings to the teeming millions of Bangladesh. “Every citizen has the right to get public services and it affects each of the citizens especially the poorer section when public services are privatised,” he added.

Prof Anu Muhammad said the IFIs have always put pressure for trade liberalisation and privatisation that made health, education and livelihood of millions of poor people costly.

Eric Toussaint said the South Asian nations are now confronting the debt crisis and the world’s capitalism is singularly responsible for it.

Prof MM Akash said, “Bangladesh can withstand by ignoring the wrong prescription of IMF and World Bank as the country has a satisfactory foreign currency reserve with a positive balance Balance End of year statement of a company’s assets (what the company possesses) and liabilities (what it owes). In other words, the assets provide information about how the funds collected by the company have been used; and the liabilities, about the origins of those funds. of payment.”

He said the World Bank and the IMF have become morally weak as the global economic crisis has already exposed their erroneous stances while prescribing policies.

“The world, especially the Third World, is bearing the consequence of the wrong economic policy of these two institutions,” he said.



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