FDC Statement on the 2009 Spring Meetings of IMF-WB

“Living dead” is a popular term used to describe various movies on reanimated corpses or mindless, rotting human beings resurrected from the dead causing havoc and carnage to the general living public. Nothing is closer to this than the current condition of the International Monetary Fund (IMF) and the World Bank (WB) as they conduct their Spring Meetings this April 25-26 in Washington D.C.

We, in the Freedom from Debt Coalition (FDC) believe the attempt of these “zombie-like” international financial institutions (IFIs) with the blessings of the G20 to bring back to life whatever is left of its dead reputations is as dead as the discredited neoliberal economic paradigm. Their plan to fashion themselves as “redeemers” in the context of the current economic crisis is as horrendous as the reanimated dead creatures straight out of a badly written horror film.

Rotting Reputation, Dead Legitimacy

To begin with, the World Bank and the IMF have no legitimacy much more political and moral ascendancy to assume the role of “dashing white knights in shining armor” to save the people from the grueling economic crisis, which they helped create in the first place.

Lest we forget, these IFIs were responsible for introducing crippling neoliberal economic conditionalities to developing nations in exchange for loans which have only made their fragile economies vulnerable to chronic crises while burying them to more debts. Their culpability in the 1997 Asian financial crisis and subsequent economic conundrums such as those suffered by Mexico and Argentina rendered them dead to many developing nations that have increasingly shunned their loans and flawed development policies.

In the Philippines alone, our export-oriented development paradigm and trade liberalization, which they prescribed, are a disaster. It not only defeated key domestic industries, but produced massive unemployment and deindustrialization which in turn aggravated poverty.

Furthermore, the deregulation and privatization schemes these IFIs so promoted and triumphantly re-echoed by regional banks such as the Asian Development Bank (ADB) resorted to the free reign of the private sector to sensitive industries and public utilities. As a result, the Philippines has the second highest electricity rates in Asia while many of its communities are still without access to clean water.

Worse, the policies they prescribed such as the privatization of important public utilities saddled the country to more unnecessary if not illegitimate debts as it incurred numerous fraudulent contracts whether from unscrupulous independent power producers (IPPs) or from foreign-assisted water projects to supposedly meet the obligation and development targets of the said privatization scheme.

“Deadmocracy”

Second, historically, the actions much more the policy recommendations of IFIs do not reflect the interest of the global majority and there are no signs they will do so in the immediate. South countries are still widely underrepresented with nominal voting rights while developed countries are extremely overrepresented in all governing bodies.

As such, we believe, resolutions to the crisis under IMF-WB will remain north-centric with the most powerful developed nations calling the shots.

A New Debt Crisis: A New Necropolis of the Poor

Lastly, any effort to solve the global economic crisis and/or to immediately bring relief to many developing nations with discredited IFIs such as the World Bank and the IMF playing central roles will inevitably create a new and profound debt crisis out of the already paralyzing economic debacle.

This is true especially of strong recommendations urging IFIs to relax procurement rules, environmental standards as well as other safeguards that could delay disbursements to developing nations to offset their growing financing shortfall as a result of the crisis but more importantly, to keep the global market liquid enough for the old international economic architecture to survive.

This is the drive behind World Bank president Robert Zoellick’s proposal to donors to commit 0.7 percent of their economic stimulus packages to a “vulnerability fund” as well as the IMF proposal to expand its powers such as the ability to issue bonds to supposedly help developing countries cope with the crisis. Clearly, this could usher a new era of irresponsible lending and loan-pushing—a new graveyard to the already debt-burdened developing nations.  

Unconditional Debt Cancellation, New Financing System

Obviously, the plan to resurrect the IMF and World Bank and package them as our “saviors” from the global economic crisis is a dead idea. We do not need “living dead solutions.” The central part of the problem cannot be part of the solution. What we need are new and bold recommendations that will free us from this recurring nightmare.

Thus, we demand:

1. The cancellation of all debt claims without conditionalities and respect for the sovereign right of countries to take unilateral action to stop payments or repudiate illegitimate debt claims as the best economic stimulus framework for developing nations.

2. The end of Multilateral Finance domination by the IMF, the World Bank Group and the regional banks and reparation for their responsibility in the current and past crises.

We also enjoin the global community to:

1. Comprehensively resolve the economic crisis by addressing it through more democratic and plural international bodies such as the United Nations as compared to the elitist G20 and;

2. Construct alternative, autonomous and democratic, regionally based financing for development institutions and mechanisms for the people of the south. -30-

FDC Chapters

chapters