Time to get tough with World Bank and IMF, says Christian Aid
-07/07/06
The UK must st
Time to get tough with World Bank and IMF, says Christian Aid
-07/07/06
The UK must stop funding the World Bank and the International Monetary Fund (IMF) because the policies they are operating are damaging the global poor, says a hard-hitting new report from the UK-based international development agency Christian Aid.
The radical call to withdraw British money from these international financial institutions (IFIs) comes in the wake of what the agency, which works with people of all faiths and none, says is damning evidence showing that they persistently attach economic conditions to loans, grants and debt cancellation that harm poor countriesí chances of development.
Christian Aid has for many years pursued a bilateral and multilateral dialogue with the IFIs, while others ñ including for a time the World Council of Churches ñ have kept a greater distance, claiming that the neo-liberal agenda has rendered their policies ìbeyond useî from the perspective of the worldís poor.
Now the agency is arguing that the time has come to get tough, and to increase the political pressure on bodies which many argue lack sufficient accountability, participation and transparency in their activities. That means stopping funding, it says.
Effectively, the global finance institutions are being declared “not fit for purpose” in their current form and trajectory, a phrase recently made famous by British Home Secretary John Reid in controversial comments about elements of his own department.
Last year, British PM Tony Blair bowed to years of campaigning by Christian Aid and others by announcing that Britain would no longer be forcing these conditions on the aid it gives. Since then the UK government says it has been trying to persuade the World Bank and IMF to follow suit, but to no avail.
In its latest report, Challenging Conditions: A New Strategy for Reform at the World Bank and IMF, Christian Aid says the time for gentle pressure has now passed and that Tony Blair should in future withhold around £450 million (9 per cent of the total UK aid budget) that it donates yearly to the IMF and World Bank. Norway has already pledged to redirect some of its funds from the institutions.
ìThe IMF and World Bank are insisting on pursuing anti-poor policies so it only right that Britain stops funding from them,î said Anna Thomas, Christian Aidís senior aid analyst.
ìThe whole architecture of aid is now changing and both the World Bank and the IMF are increasingly out of step with what is really needed to alleviate poverty in the developing world. Their endless mantra of privatisation and liberalisation being the only road to riches is both old fashioned and wrong headed. Britain needs to send the strongest possible signal that reform is overdueî, says Thomas.
The Christian Aid report gives many examples of World Bank and IMF reforms which have worsened, rather than reduced, poverty, the agency claims.
In Haiti, for example, 85,000 farmers and workers were hit by the closure of local sugar factories after the IMF pushed the government to lower sugar tariffs from 50 per cent to three per cent and abolish import licences. Cheap imports flooded in and local production dropped by almost 50 per cent.
In Mozambique, more than half the banks in rural areas have closed following privatisation which was introduced as a condition for World Bank loans. Farmers now have to stash their money in mattresses or bury it in the ground.
Lending to small companies and the informal sector is the backbone of private sector development in poor countries, yet privatisation has led to a 25 per cent drop in lending to local farmers during the past five years.
In Bolivia, one person died and 100 were wounded in protests against rising water costs in the city of Cochabamba. Water bills increased by up to 300 per cent after the World Bank pushed the government to lease out the cityís water and sanitation system.
This meant that poor families were spending 25 per cent of their income on water. Following the unrest, the government cancelled the contract and renationalised water services, says the report.
Christian Aid concludes that instead of providing future funds to the World Bank and the IMF they should either be redirected to effective multilateral institutions, such as the United Nations Development Programme or to bankroll the UKís share of multilateral debt cancellation.
ìEach UK taxpayer pays more than £15 a year to the IMF and World Bank. That money is being used to push developing countries to privatise services and open markets before they are ready. The British government has said it doesnít agree with this practice. Now itís time for them to put their money where their mouth is and pull the plug on the IMF and World Bank,î declared Anna Thomas.
[Also on Ekklesia: World Bank and IMF share concerns of churches says Kobia; Campaigners hail debt victory but warn of missing billions; Debt campaigners look to ‘unfinished business’ of G8; Christian Aid ëappalledí by Wolfowitz nomination; Christian Aid back Co-op Bank over international finance concerns; Finance ministers agree to freeze debts of tsunami countries; Business on debt ‘still unfinished’ say campaigners]
Time to get tough with World Bank and IMF, says Christian Aid
-07/07/06
The UK must stop funding the World Bank and the International Monetary Fund (IMF) because the policies they are operating are damaging the global poor, says a hard-hitting new report from the UK-based international development agency Christian Aid.
The radical call to withdraw British money from these international financial institutions (IFIs) comes in the wake of what the agency, which works with people of all faiths and none, says is damning evidence showing that they persistently attach economic conditions to loans, grants and debt cancellation that harm poor countriesí chances of development.
Christian Aid has for many years pursued a bilateral and multilateral dialogue with the IFIs, while others ñ including for a time the World Council of Churches ñ have kept a greater distance, claiming that the neo-liberal agenda has rendered their policies ìbeyond useî from the perspective of the worldís poor.
Now the agency is arguing that the time has come to get tough, and to increase the political pressure on bodies which many argue lack sufficient accountability, participation and transparency in their activities. That means stopping funding, it says.
Effectively, the global finance institutions are being declared “not fit for purpose” in their current form and trajectory, a phrase recently made famous by British Home Secretary John Reid in controversial comments about elements of his own department.
Last year, British PM Tony Blair bowed to years of campaigning by Christian Aid and others by announcing that Britain would no longer be forcing these conditions on the aid it gives. Since then the UK government says it has been trying to persuade the World Bank and IMF to follow suit, but to no avail.
In its latest report, Challenging Conditions: A New Strategy for Reform at the World Bank and IMF, Christian Aid says the time for gentle pressure has now passed and that Tony Blair should in future withhold around £450 million (9 per cent of the total UK aid budget) that it donates yearly to the IMF and World Bank. Norway has already pledged to redirect some of its funds from the institutions.
ìThe IMF and World Bank are insisting on pursuing anti-poor policies so it only right that Britain stops funding from them,î said Anna Thomas, Christian Aidís senior aid analyst.
ìThe whole architecture of aid is now changing and both the World Bank and the IMF are increasingly out of step with what is really needed to alleviate poverty in the developing world. Their endless mantra of privatisation and liberalisation being the only road to riches is both old fashioned and wrong headed. Britain needs to send the strongest possible signal that reform is overdueî, says Thomas.
The Christian Aid report gives many examples of World Bank and IMF reforms which have worsened, rather than reduced, poverty, the agency claims.
In Haiti, for example, 85,000 farmers and workers were hit by the closure of local sugar factories after the IMF pushed the government to lower sugar tariffs from 50 per cent to three per cent and abolish import licences. Cheap imports flooded in and local production dropped by almost 50 per cent.
In Mozambique, more than half the banks in rural areas have closed following privatisation which was introduced as a condition for World Bank loans. Farmers now have to stash their money in mattresses or bury it in the ground.
Lending to small companies and the informal sector is the backbone of private sector development in poor countries, yet privatisation has led to a 25 per cent drop in lending to local farmers during the past five years.
In Bolivia, one person died and 100 were wounded in protests against rising water costs in the city of Cochabamba. Water bills increased by up to 300 per cent after the World Bank pushed the government to lease out the cityís water and sanitation system.
This meant that poor families were spending 25 per cent of their income on water. Following the unrest, the government cancelled the contract and renationalised water services, says the report.
Christian Aid concludes that instead of providing future funds to the World Bank and the IMF they should either be redirected to effective multilateral institutions, such as the United Nations Development Programme or to bankroll the UKís share of multilateral debt cancellation.
ìEach UK taxpayer pays more than £15 a year to the IMF and World Bank. That money is being used to push developing countries to privatise services and open markets before they are ready. The British government has said it doesnít agree with this practice. Now itís time for them to put their money where their mouth is and pull the plug on the IMF and World Bank,î declared Anna Thomas.
[Also on Ekklesia: World Bank and IMF share concerns of churches says Kobia; Campaigners hail debt victory but warn of missing billions; Debt campaigners look to ‘unfinished business’ of G8; Christian Aid ëappalledí by Wolfowitz nomination; Christian Aid back Co-op Bank over international finance concerns; Finance ministers agree to freeze debts of tsunami countries; Business on debt ‘still unfinished’ say campaigners]