Spring Meetings of the IMF and World Bank
24 April by CADTM International
Photo : A protest at COP28 in Dubai. Credit : Flickr/Mídia NINJA, CC
The Spring Meetings of the IMF and World Bank ended on Saturday 20 April 2024. As expected, there were no changes to the neoliberal policies promoted and imposed by the Bretton Woods institutions. A demonstration was held in front of the headquarters of the two institutions, and the present call to put an end to austerity policies was delivered.
With the climate threat becoming more urgent every day, with the Global South facing a new debt crisis and with hunger increasing worldwide since the CoViD-19 pandemic, here are the few decisions that were made by the Spring Meetings of the IMF IMF
International Monetary Fund Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.
When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.
As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).
The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.
It consists of several closely associated institutions, among which :
1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;
2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;
3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.
As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.
in Washington (USA):
The pseudo-concern of the World Bank and the International Monetary Fund IMF over the level of poverty and inequality in the world in fact masks the IMF’s return as a destructive force since the pandemic. Taking advantage of the CoViD-19 pandemic, Russia’s aggression in Ukraine and the increase in interest rates Interest rates When A lends money to B, B repays the amount lent by A (the capital) as well as a supplementary sum known as interest, so that A has an interest in agreeing to this financial operation. The interest is determined by the interest rate, which may be high or low. To take a very simple example: if A borrows 100 million dollars for 10 years at a fixed interest rate of 5%, the first year he will repay a tenth of the capital initially borrowed (10 million dollars) plus 5% of the capital owed, i.e. 5 million dollars, that is a total of 15 million dollars. In the second year, he will again repay 10% of the capital borrowed, but the 5% now only applies to the remaining 90 million dollars still due, i.e. 4.5 million dollars, or a total of 14.5 million dollars. And so on, until the tenth year when he will repay the last 10 million dollars, plus 5% of that remaining 10 million dollars, i.e. 0.5 million dollars, giving a total of 10.5 million dollars. Over 10 years, the total amount repaid will come to 127.5 million dollars. The repayment of the capital is not usually made in equal instalments. In the initial years, the repayment concerns mainly the interest, and the proportion of capital repaid increases over the years. In this case, if repayments are stopped, the capital still due is higher…
The nominal interest rate is the rate at which the loan is contracted. The real interest rate is the nominal rate reduced by the rate of inflation. by the central banks of the North – which have brought on a new international debt crisis –, the IMF has issued loans to more than a hundred countries in difficulty, imposing its usual neoliberal conditionalities: increases in the VAT, cuts to social budgets (health, education), cuts in subsidies for basic necessities, etc. Their practices have a harsher and harsher impact on the poorest populations, increase inequalities and obstruct the struggle against extreme poverty.
The CADTM once again denounces the domination of the two Western powers, the USA and Europe, over the governing bodies of the two Bretton Woods institutions through tacit agreement, whether or not one is headed by a citizen of the United States and the other by a European. The CADTM denounces the under-representation of the countries of the Global South in these two institutions. It recalls that until now, the 45 countries of sub-Saharan Africa have had to settle for 4.7% of the voting rights in the IMF and be forced to divide themselves into two groups, while the United States by itself holds more than 16.5% of the voting rights and Western Europe nearly 20%.
These few announcements also reflect the weakness of the reactions of the IMF and the World Bank in the face of the climate crisis the world is now in. Increasing loans and the accompanying debts and neoliberal conditionalities, or calling for “mobilization of the private sector” will not bring about the radical change that is needed. These Spring Meetings are another confirmation of the outmoded liberal capitalist vision that is still being defended by the Bretton Woods institutions.
The CADTM International network recalls that the solutions to the crises we are now undergoing will not come from these institutions, which are in fact part of the problem. The solution lies in mobilization of the people who are the victims of the debt system and of ultraliberal policies. The CADTM, an international network totally committed to supporting and broadening these mobilizations through education and the concretization of alternatives, calls for a complete refounding of the international architecture:
These solutions were defended at the counter-summit in Marrakesh: Marrakesh Statement
Translated by Snake Arbusto and Christine Pagnoulle
[1] Also see, in French, Luc Mukendi, “La dette en RDC : Le mégaprojet « Grand Inga III »” (Debt in DRC : The ‘Grand Inga III
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