IMF, World Bank and Debt


Letter to the Editor, by Maire Kelly

Irish Times
October 6, 2000


The IMF and World Bank were set up after the Second World War to guarantee the financial stability of the world. Today their "world" is the G7 and the EU. They pursue the interests and agenda of powerful nations which make up 14 per cent of IMF membership but hold 56 per cent voting power. Last week, they slipped away from Prague, a day earlier than expected, with little or no public questioning.

A modest proposal, with strings attached, put forward by Canada and supported by Mr McCreevy, for a freeze on debt owed to rich countries by poor countries was unceremoniously vetoed. Debt owed to the IMF/ World Bank was not included in this proposal.

The World Bank and IMF have employed three types of interest in their dealings with the developing world; self-interest, compound interest and compounded self-interest. Self interest lies in the fact that both of these institutions lend money in the knowledge that they are protected from loss while helping their masters gain trade or political advantage. Their loans for disastrous projects, or to corrupt leaders, must always be repaid. It is irrelevant how impoverished poor country populations become, how many years repayment takes, or how many lives it costs.

Compound interest takes care of any missed payments. It piles on and increases indebtedness. Compounded self-interest comes into play because in a world of free enterprise and risktaking, the IMF and World Bank have no requirement to be either enterprising or to face risk. If all comes to all, Western taxpayers will bail them out. Jubilee 2000 UK reports that following Hurricane Mitch a total of $175.4 million in aid-money - i.e. taxpayers' money - was used, not to help the victims but to repay debt to the already overflowing coffers of the World Bank/IMF.

Last Saturday, 1,000 people of many shades of opinion on "globalisation" had a carnival march through Dublin. It passed without media comment. Concern about "globalisation" is now associated in the public mind with violence and that view is just fine with the "powers that be". They are quite happy that media coverage homes in on a minority of messengers and completely misses the many messages about injustice and misuse of power. Once more, the undemocratic and unaccountable World Bank/IMF have slipped quietly away from an expensive talking shop, having had an easy ride from an unquestioning media. I guess they returned home laughing all the way to the Bank (and the Fund.)

Maire Kelly, Jubilee Ireland.

More Information on the World Bank
More Information on the International Monetary Fund
More Information on Debt Relief

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