Stop Unilateral Support of IMF: GFW Letter of Appeal

Read a letter of appeal that the Global Fund for Women recently sent to the US House of Representatives, expressing support for a range of critically needed changes to the policies and processes of the International Monetary Fund (IMF) that we view as essential to ensuring that the United States is supporting women globally suffering from the impacts of the global financial crisis.

The Honorable David Obey, Chairman
Committee on Appropriations
Room H-218, The Capitol
U.S. House of Representatives
Washington, DC  20515

The Honorable Nita Lowey, Chairwoman
State, Foreign Operations Subcommittee
Room HB-26, The Capitol
U.S. House of Representatives
Washington, D.C. 20515
 
Dear Chairman Obey and Chairwoman Lowey:

We are writing to express support for substantive changes to the policies and processes of the International Monetary Fund (IMF) that we view as essential to ensuring that the United States is supporting women globally suffering from the impacts of the global financial crisis. As the world’s largest foundation solely dedicated to advancing the human rights of women around the world, we have heard volumes from women’s organizations from the developing world about the adverse impacts that IMF policies have had on their countries’ ability to attain equitable and sustainable development.

We understand that the Senate has added a $108 billion appropriation to the FY 2009 supplemental appropriations bill, which is intended to proceed to conference this week. The bill has several IMF reform amendments on important issues of transparency and democratic process, and specific conditions that we support, such as some of the funds being used for the poorest countries. However, the key issue of the contractionary policie,s which are exacerbating – rather than buffering – recessions in recipient countries must be addressed in order for the IMF loans to have a helpful, rather than harmful, impact on women and communities globally.

We recognize the importance of a swift, internationally coordinated response to the global financial crisis to ensure that developing countries have the additional resources they need to cope with the crisis. However, if those resources continue to come with policy prescriptions mandated by the IMF that actually shrink those economies, the resources do more harm than good. Despite IMF claims, to the contrary, independent research from multiple sources has demonstrated that IMF loans since the onset of the crisis in September 2008 have imposed policies such as strict budget deficit reduction targets, high interest rates, freezes in social benefits, increases in public service fees, and tax increases. These and other measures are resulting in lowered stimulatory social spending on health and education, increased unemployment, increased poverty, and even the closure of schools and hospitals. When countries suffer from increased poverty and unemployment, and reduced budgets for health and education, it is women who suffer the disproportionate impacts.  Not only is this true since September 2008, it has unfortunately been the case for the last 20 years in regions such as Sub-Saharan Africa.

We urge you to ensure that the IMF is not given a “blank check.”  Specifically, any increase in funding for the IMF must be conditioned on a strong commitment to ensure that the institution actually benefits the recipient country populations rather than increasing poverty and unemployment. We urge you to include all of the following provisions in the bill:

•    Use the Stimulus Money for Stimulus, not Contraction.  While the IMF claims that it has reformed, its track record since the onset of the economic crisis in September 2008 demonstrates the routine imposition of contractionary monetary and fiscal policies, which are exacerbating recessions in recipient countries. We urge you to include language to mandate the U.S. Executive Director to the IMF to require that the funds allocated by Congress and provided by U.S. taxpayers for global stimulus are used to actually promote global economic stimulus rather than continue the IMF’s contractionary policies that are worsening recessions worldwide.  

•    Resources for Low-Income Countries.  Low-income countries are suffering disproportionately as a result of a global financial crisis, which was not of their making.  We urge you to include language requiring the U.S. Executive Director to the IMF to ensure that some of the revenue from the planned gold sales and/or other sources of income will be used to provide at least $5 billion in non-debt-creating assistance to the world’s poorest countries – via debt relief.

•    Democratic Process.  Currently, the IMF negotiates and obtains approval for loans from the executive branch of recipient countries, leaving little opportunity for democratic debate in recipient countries over the content and terms of IMF loans.  We urge you to include bill language mandating the U.S. Executive Director to the IMF to require parliamentary approval of all IMF loans. This would help to ensure greater democratic participation and transparency, as well as safeguard against corruption.

•  Transparency.  Some of the IMF’s most important documents are considered classified, strictly confidential, or secret, including “side letters” containing policy conditions that the IMF requires a recipient government to implement as a condition of loan disbursements, and transcripts of meetings. Draft IMF documents are not disclosed prior to approval by the Board of Executive Directors which precludes input from country constituencies, including critical input from civil society groups that focus on economic policy.  We urge you to include language that would mandate greater transparency and public availability of documents within a reasonable time period. 

We believe that the United States, as the country responsible for triggering the current global economic crisis, has a special responsibility to ensure that countries suffering from the contagion of the global recession receive special assistance to ameliorate the worst impacts on their most vulnerable citizens, and particularly on women. If the U.S. Congress is going to allocate $108 billion in taxpayer resources for an expanded IMF to respond to the crisis, it is of the utmost importance for Congress to ensure that the resources provided to the IMF are used in an empowering and effective manner that achieves the global goal of assisting, rather than harming, countries experiencing devastating impacts of the global recession.

Sincerely,

Kavita N. Ramdas
President & CEO

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