Civil society letter on IMF review of lending instruments, facilities, and policies

Note: Though this letter has already been sent to finance ministers and IMF EDs, we will continue to update the signtures throughout 2008 and use it in advocacy efforts related to the lending review. Please communicate sign-ons to info@brettonwoodsproject.org. Organisational (preferred) and individual sign-ons will be accepted. Please indicate if you are signing as an organisation or individual. Questions can be directed at pchowla@brettonwoodsproject.org.

6 October 2008

Ministers of Finance
IMF Executive Directors

Re: IMF Review of Lending Instruments, Facilities, and Policies

It is time to seriously re-think the role that the IMF should be playing in low-income countries. The Executive Board’s plan to review all the Fund’s lending instruments and facilities over the next few months presents an opportunity to do so.

The IMF has come under serious criticism both internally and externally about its focus and role in low income countries. The Malan Committee highlighted the inappropriate role the Fund is playing in low-income countries, overstepping its traditional role of addressing short term balance of payment crises to act as a development financier, even though it is not a development institution. The report concluded that “the Fund’s financing in low-income countries is an area where it has moved beyond its core responsibilities.”

The Independent Evaluation Office (IEO) of the IMF has highlighted problems with both the structural and macroeconomic conditions in Poverty Reducation and Growth Facility (PRGF) countries. The IEO report released in January 2008 highlighted the lack of progress on reducing conditionality. Despite this, the first annual report on structural conditionality shows that it has increased rather than decreased. The 2007 IEO report demonstrated that PRGF programs largely replicate the conditions attached to the “structural adjustment” lending which has been so heavily criticized.

While the Fund may have a role to play in addressing short-term balance of payments problems, it is clearly not equipped to act as a long-term development lender in low-income countries. Conditionality included in PRGF programs constrains the domestic policy space needed by countries to develop innovative economic policies best suited to create growth and reduce poverty in their specific country contexts. It also undermines the accountability of borrowing governments, who blame IMF conditions for the lack of investment in their social sectors.

The IMF Board should take the necessary steps to ensure that the planned review of the PRGF is rigorous and broad. We believe that any comprehensive examination is likely to echo past recommendations for a sharp curtailment or closure of the PRGF, given the IMF’s lack of development expertise and apparent inability or disinclination to limit the use of conditionality. We call on you to close the PRGF to new requests. The funds remaining in the PRGF Trust should be shifted to other institutions and other forms of development assistance, implying no net decrease in resources available to low-income countries.

With new resources available to low-income countries from debt relief and scaled-up aid, now is the time to make sure that the international financial architecture meets the serious challenges faced by low-income countries. That calls for new thinking about the IMF’s role. The undersigned organisations (and individuals) urge you to use the IMF’s facility review to do just that.

Signed (as of 7 October 2008):

Organisations

1. African Network on Debt and Development (AFRODAD), Africa Regional
2. Jubilee South-Asia/Pacific Movement on Debt and Development, Asia Regional
3. Jubilee Australia, Australia
4. Angikar Bangladesh Foundation, Bangladesh
5. Equity and Justice Working Group, Bangladesh
6. 11.11.11 – Coalition of the Flemish North-South Movement, Belgium
7. European AIDS Treatment Group, Belgium
8. Network for Social Justice and Human Rights, Brazil
9. Rede Brasil sobre Instituições Financeiras Multilaterais, Brazil
10. Centre for the Promotion of Economic and Social Alternatives (CPAES), Cameroon
11. Halifax Initiative, Canada
12. RESULTS Canada
13. Social Justice Committee, Canada
14. Instituto Latinoamericano de Servicios Legales, Colombia
15. Basic Education Association in Ethiopia (BEAE), Ethiopia
16. Friends of the Earth, France
17. Plate-forme Dette & Développement, France
18. erlassjahr.de, Germany
19. All-Africa Students Union, Ghana
20. EMPOWER, India
21. People’s Alliance for Debt Cancellation (GARPU), Indonesia
22. ActionAid International, International
23. Catholic development agencies working together for poverty eradication and social justice (CIDSE), International
24. CRBM, Italy
25. Kenya Debt Relief Network, Kenya
26. Health Rights Advocacy Forum (HERAF), Kenya
27. Pamoja Reflect Network, Kenya
28. Daughters of Mumbi Global Resource Center, Kenya
29. Malawi Economic Justice Network, Malawi
30. IRPAD/Afrique, Mali
31. National Federation of Women living with HIV and AIDS , Nepal
32. A SEED Europe, Netherlands
33. SLUG – Norwegian Coaltion for Debt Cancellation, Norway
34. Society for Women and AIDS in Africa, Sierra Leone
35. Berne Declaration, Switzerland
36. Economic and Social Research Foundation, Tanzania
37. Tanzania Human Rights Fountain (TAHURIFO), Tanzania
38. Institution of the Uganda National NGO Forum, Uganda
39. Bretton Woods Project, UK
40. Catholic Agency for Overseas Development (CAFOD), UK
41. Jubilee Debt Campaign, UK
42. Jubilee Scotland, UK
43. Christian Aid, UK
44. Plan B, UK
45. The New Economics Foundation, UK
46. Medsin UK, UK
47. Treatment Action Group, USA
48. Jubilee USA, USA
49. Center of Concern, USA
50. Global Exchange, USA
51. Maryknoll Office for Global Concerns, USA
52. Sisters of Charity Federation, USA
53. GrassRoots Africa, USA
54. AfricaFiles, USA
55. Gender Action, USA
56. Just Foreign Policy, USA
57. The Development Group for Alternative Policies, USA
58. Foreign Policy In Focus, USA
59. Africa Action, USA
60. Seattle RESULTS, USA
61. World Hunger Education Service, USA
62. The Ihangane Project, USA
63. Global Action for Children, USA
64. Jubilee Zambia, Zambia
65. Ecumenical Support Services, Zimbabwe
66. Africa 2000 Network Foundation, Zimbabwe
67. Zimbabwe Coalition on Debt and Development (ZIMCODD), Zimbabwe
68. MWENGO, Zimbabwe
69. Treatment Action Group, USA
70. CAFOD
71. CNCD, Belgium
72. Norwegian Church Aid, Southern Africa Regional Office
73. The Ihangane Project

Individuals

1. Oscar Ugarteche
2. Dennis Brutus
3. Meyer Bownstone
4. Ingrid Steinitz