IMF's Golden Opportunity
Remember last year, before the whirlwind of the financial crisis hit? The International Monetary Fund then looked like a dinosaur on the verge of extinction: deserted by middle income countries, funds drying up, and redundancies being made left, right and centre.
In this dire situation, the IMF sought the agreement of its shareholders (member states) to sell some of its gold reserves to cover administrative expenses, such as staff costs.
By early this year, the IMF had experienced a complete turnaround. The financial crisis has brought the institution back centre stage (while politicians have conveniently forgotten that it was a prominent supporter of many of the now discredited financial policies). Queues for country loans are growing, and with them, increasingly good financial prospects for the Fund.
The G20 London Summit in April 2009 promised a massive amount of money to the IMF, further reducing the need for it to spend the proceeds from agreed gold sales on its admin costs. As a nod to that changed reality, and also the rise in gold prices, the G20 proposed that some of the money raised by the gold sales should go to help low income countries.
In the weeks following the Summit, civil society groups have been trying to work out exactly what this proposal means. The G20 wording was vague, and in reality any such plan needs to be agreed at the IMF Board in Washington DC. Jubilee Debt Campaign, Jubilee USA and others are calling for the new money for low income countries (the poorest 49 countries as defined by the World Bank) to be spent on debt relief and grants - not on new loans with harsh strings attached, which would create more debts for the future.
So far, nothing has been decided. Various other proposals are also on the table, including simply using the money for IMF admin costs as originally intended; putting the money towards normal IMF loan agreements, which are undemocratic and often hurt the poor; or even selling more gold for low income countries.
To add to the complications, the US Congress has to agree to any decision on IMF gold sales - and as the biggest IMF shareholder they effectively hold a veto on it. On 14 May a US Senate Committee agreed to authorise the gold sales, as part of a wider government bill, without proper discussion. Campaigners are worried that, if Congress now passes the bill, this will effectively give a blank cheque to the IMF.
We are calling, with Jubilee USA and others, for the IMF to use money from gold sales and other income to finance at least $5 billion for expanded poor country debt relief and grants.
You can see Jubilee USA's latest detailed briefing here.
You can take action on this issue here. If you want you can add a message calling for the funds to be used for debt relief.
