IMF leak reveals plans to weaken G8 debt deal
15 July 2005
IMF documents leaked to Jubilee Debt Campaign have revealed plans by some European representatives at the International Monetary Fund (IMF) to weaken the debt cancellation deal proposed by the G8 governments.
The leaks concern the G8 proposal for cancellation of 100% of outstanding debts to the IMF, World Bank and African Development Bank for countries that complete the Heavily Indebted Poor Country (HIPC) initiative. The Belgian Director at the IMF, Willy Kiekens, suggested in a statement that the IMF should NOT implement this by giving "full, irrevocable and unconditional debt relief" when countries complete HIPC. On the contrary, he suggested that these debts should not in fact be cancelled at all - flying in the face of what campaigners had been calling for and what the G8 had promised to indebted countries.
Instead, Mr Kiekens suggested that these countries continue to service their debts, but be given extra grants from the IMF equal to the amount of their debt service. This would be so that the IMF can strengthen its hold and reinforce its interference over the policies of poor countries, by:
giving grants only "on condition of the implementation of adequate policies".
threatening poor countries that if their policies go "off track" then it "would have to serve the debt".
This kind of external control over indebted countries' policies is obviously undemocratic. Moreover past experience has shown that the policies considered "adequate" or "on-track" by the IMF have been extremely damaging to poor countries.
This statement was supported by a further memo, also co-signed by the Dutch, Norwegian and Swiss directors.
However, the leaks also show that the three directors representing sub-Saharan Africa opposed the suggestions, pointing out that countries which complete HIPC have already complied with many conditions, and that the G8 proposal implied irrevocable cancellation, without further conditions. They also highlight the fact that further conditions would "delay the benefits" of any debt relief or cancellation.
Civil society groups around the world reacted angrily to the proposals. Debt campaigners in Switzerland, Norway, Belgium and the Netherlands stated that they "completely oppose" the opposals, while Demba Moussa Dembele of the Forum for African Alternatives in Senegal commented that "these documents show the IMF is still clinging to its much reviled 'conditionalities'.... [They] will not easily relinquish their influence in indebted countries.".
Jubilee Debt Campaign has been assured by the UK government that it will not support such an interpretation of the G8 proposals.
Download full text of leaked documents using the links on the right.
NB The IMF Executive Board is responsible for its day-to-day work and has 24 Directors. The US, Japan, Germany, France, the UK, Saudi Arabia and China have one Director each. Other countries share Directors between a larger group. Almost all of sub-Saharan Africa is represented by just two Directors: the exception is Ghana, which is grouped together with Iran and other countries.
