This year’s IMF spring meetings ended inconclusively at the weekend, with most major decisions deferred until the June G20 summit in Canada. The IMF has been tasked with coming up with recommendations for how the financial sector could make a fair and substantial contribution towards paying for the effects of the economic crisis. However, while good ideas were raised at the weekend on repaying the costs of rich country bailout, there was a disappointing silence on support for African countries.
This is despite the IMF’s own analysis finding that “the global financial crisis greatly compounds the policy challenges confronting the region as it strives to consolidate its economic gains and meet the Millennium Development Goals (MDGs)”.
ONE’s European Director Oliver Buston responded by highlighting the need for the IMF to take account of Africa in their recommendations:
“Countries in Africa that did nothing to cause the crisis are estimated to have lost $130billion due to falls in trade, FDI, remittances and bank lending. The IMF should make clear in their final report to the G20 in June that some of the revenue raised from their proposal on financial activities will be directed to Africa. Africa should not be forgotten when it comes to securing a global recovery.”
ONE will use the next few weeks before the G20 in Toronto to press Africa’s case for inclusion in the IMF’s final report and help ensure that hard won progress on reducing extreme poverty is not undermined.
As expected, the International Monetary Fund (IMF) executive board today approved $102 million in aid for Haiti. According to the IMF, this constitutes the “largest amount made available so far to the Haitian authorities after the earthquake.”
Yesterday on CNN, Christiane Amanpour interviewed the managing director of the International Monetary Fund. During the interview, Strauss-Kahn took the opportunity to clarify the IMF’s $100 million loan to Haiti, and his hopes for full cancellation of Haiti’s debt.
Here’s a rough transcript:
Amanpour: Let me just go quickly to something else you mentioned. The loans. Both the IMF, you’ve proposed a $100 million loan, has said that that will be interest-free, at least until the end of 2011. The World Bank has said that they will stop or not demand payments on their loan of $38 million for the next five years. But many are calling for debt relief for Haiti. Why shouldn’t Haiti, the poorest country in the Western Hemisphere have its debt relieved and wiped out?
Strauss-Kahn: That’s absolutely right. We are not allowed in the IMF to make grants, we make loans. But there is no repayment scheduled before five years from now. And I’m advocating the fact that in this five years’ time, we will have time to build a debt cancellation for Haiti. It’s impossible to ask a country like Haiti to repay debt when they are in the situation we have seen. So, it’s not only an economic problem now, it’s more humanitarian question and also partly a philosophical problem. Can humanity avoid to help a country in such a situation? My answer is no. We have to help them immediately with what we have as a tool. The only tool I have is a loan, no repayment for five years, no interest rate, that’s for immediate need. But then we have to build something stronger and of course debt cancellation in my view has to be part of it.
This isn’t the first time Rachel Maddow has used her program to encourage international cancellation of Haiti’s debt. Watch her interview with Jubilee USA’s Neil Watkins here.
As we work to persuade world leaders to drop Haiti’s debt, the International Monetary Fund (IMF) has clarified the terms of their $100 million loan. ONE is encouraging that emergency earthquake assistance is provided in the form of grants, not debt-incurring loans.
Today, the IMF put out an announcement clarifying the terms of its new loan to Haiti–it’s “an interest-free loan of $100 million in emergency funds.” A spokesman for the IMF emailed me to confirm that “the US$100 million loan does not carry any conditionality. It is an emergency loan aimed at getting the Haitian economy back to function again…” The IMF’s managing director Dominique Strauss-Kahn said in a statement that the IMF would immediately work to cancel the entirety of Haiti’s debt ($265 million) to the fund:
“The most important thing is that the IMF is now working with all donors to try to delete all the Haitian debt, including our new loan. If we succeed–and I’m sure we will succeed–even this loan will turn out to be finally a grant, because all the debt will have been deleted.”
In other words, as the IMF is processing a loan, it is also making a public promise to try to cancel it.
For some useful background on the figures behind Haiti’s debt, check out our policy brief here.
The annual fall meetings of the World Bank and IMF in Istanbul this week focused on the “road to recovery” from the global economic crisis. While we didn’t see major new initiatives emerge from the meetings, the Bank and the Fund reaffirmed important commitments to help emerging market and developing countries cope with the impacts of the financial crisis. These include commitments to ensure the Bank and the Fund have adequate resources to respond to the crisis and timetables for governance reforms that would give greater voice and representation to emerging market and developing countries.
They echoed calls to: protect core spending on health, education, infrastructure, agriculture and social safety nets; revive global trade and investment; and establish a multilateral trust fund at the World Bank for the food security initiative. The World Bank and African Development Bank also announced this week that they would invest $215 million to bring high-speed, low-cost internet access to central African countries.
While important progress is being made at the institutions, some say it’s not going fast enough or deep enough. Nancy Birdsall, at the Center for Global Development, says the newly inclusive G20 is more progressive than the modest changes in governance being proposed at the World Bank and IMF. Several African finance ministers also issued a statement during the annual World Bank and IMF meetings calling for their countries to have a voice in the G-20, and another self-styled “group of 30” financial figures called for much more dramatic reforms at the IMF including ending the U.S. veto power and cutting the number of European board chairs.
We’ll be watching to see how these financial mechanisms and new governance proposals will benefit sub-Saharan African countries. In the meantime, read more of ONE’s analysis of the meetings here.
The World Bank and International Monetary Fund (IMF) fall meetings will take place this weekend and early next week in Istanbul, Turkey. This year’s meetings will focus on the impact of the global financial crisis on developing countries and “the road to recovery.”
Among the main points on the agenda are:
Progress and further solutions needed to help countries hit hard by the financial crisis, particularly related to downturns in capital flows, trade, remittances and tourism.
Financial capacity of the World Bank and IMF to respond to the needs of developing countries hit hardest by the financial crisis. The World Bank and IMF have both recognized increase demand from developing countries that are trying to cope with the impacts of the financial crisis.
Climate issues in the run up to the international negotiations in Copenhagen in December 2009.
Review of progress of the current round of funding of the World Bank’s International Development Association (IDA) – that’s the branch that provides no-interest loans and grants to the world’s poorest countries.
Changes in governance of the international financial institutions (the IMF, World Bank, etc.) to increase voice and participation of emerging and developing countries.
ONE is campaigning to ensure that the Congressional budget does not cut foreign assistance programs like Feed the Future that help people break the cycle of poverty and hunger.
The Horn of Africa is experiencing its worst drought in 60 years. More than 11 million people, mostly nomadic pastoralists and farmers in south-central Somalia, north-eastern Kenya, and south-eastern Ethiopia, are severely lacking access to food.
2011 marks 30 years since the first cases of AIDS were documented. Take a closer look at the specific, achievable goals we must hit by 2015 to make this year the beginning of the end of AIDS.
As aid agencies warn more than 9 million people could be affected by a food crisis in East Africa, world leaders are failing to keep their 2009 promises to tackle the causes of chronic hunger and support farmers in the world's poorest countries.
