Debt campaigners urge gold sales to fund debt cancellation

The government's of the world's richest countries must agree to sell International Monetary Fund (IMF) gold to fund cancellation of the crippling debts being payed by poor countries.

The IMF has huge, underused and undervalued gold reserves - it values this gold as being worth $9 billion, but at current market prices it is in fact worth about $45 billion. It is an outrage that the rich governments which control the IMF do not authorise the use of this gold to fund debt cancellation, while demanding millions in debt payments from poor countries which cannot afford the basic needs of their own people.

The debt payments Zambia has been making to the IMF alone are larger than its entire education budget. Many impoverished countries are forced to spend more on debt than on either health or education. Jack Jones Zulu of Jubilee Zambia said in January that 'our people are dying because of debt, because we do not have the money for hospitals and drugs.' Average life expectancy in Zambia is now 33 years.

The countries involved in the Heavily Indebted Poor Countries (HIPC) initiative are currently paying debts of $7 billion to the IMF. Sales of IMF gold could release as much as $40 billion, enough to fund cancellation of IMF debt as well as some debts being paid to the World Bank and other development banks.

Some governments had suggested that selling IMF gold would harm gold-producing countries, including poor countries. But the governments of poor countries such as Tanzania and South Africa, two of the biggest gold producers in Africa, have publicly supported sales of IMF gold. For instance, President Mkapa of Tanzania, speaking at the Jubilee Debt Campaign conference in February 2005, said 'I'm in favour of it. I was worried it might reduce revenues for Tanzania, but I have been assured that selling gold would not drastically affect the price of gold in the world market. So I'm in favour of it. We are asking the major shareholders in the IMF to consider this proposal favourably.' Even the IMF itself, in a paper on the issue, has stated that gold sales are feasible and would not harm the market. Rich governments now have no excuse not to act.

Last time the G7 Finance Ministers met, in London in February 2005, they expressed a 'willingness to provide as much as 100% debt relief' and asked the IMF to produce proposals for how debt cancellation could be funded, including looking at possible use of IMF gold. Now that the IMF has made clear - as campaigners have long been arguing - that gold sales are feasible, there is no excuse for rich governments not to act.