Breaking the Chains of Debt at the IMF
In April 2009, following the global financial crisis in late 2008, leaders of the G20 (the world's 19 largest economies plus the European Union) designated the International Monetary Fund as the central vehicle for global economic recovery and tripled the Fund's lending capacity from $250 billion to $750 billion.
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With the influx of funding and the announcement of a new managing director, Dominique Strauss-Kahn, the IMF set about attempting to win support from economists, politicians, NGOs, and nation-states whose trust the organization had lost over the past decade. During that time, the IMF has received extensive bad press and repeated protests across the globe protesting, among other things, its "conditionalities" -- requirements such as public wage freezes or privatization which were imposed on borrower countries, and which have aroused much controversy and been criticized by activists, economists, and citizens. Recently, IMF has attempted to demonstrate the increased flexibility in their loans to Low Income Countries (LICs). The Fund has reduced many of its conditionalities, and concessional lending -- loans free from interest that offer a much longer grace period and maturity -- to LICs has increased dramatically.
The IMF's mandatory deficit and reserve targets [for nations' budgets] leave LICs with little choice but to divert government revenue and foreign aid away from needed public expenditure.
What does that mean? It means the IMF could be causing economic harm rather than recovery:
Without genuine reform of the IMF's strict fiscal and austerity requirements ... the institution's expanded crisis role may actually keep low-income countries from recovering, push them into greater debt, and hinder long-term development.
As part of the week of action during the IMF's annual fall meeting in Washington, D.C., Jubilee USA sponsored a congressional briefing and activist teach-in. The week ended with a March for Economic Justice. Protestors gathered outside the IMF and carried more than 10,000 paper-link chains, covered in messages from students, union members, and church-goers from across the country to President Obama, asking for debt cancellation.
The protestors wrapped the chains around the World Bank and the IMF and marched to the White House, singing "peace, salaam, shalom," as they placed the chains on the gates of the White House. Making a public statement about the debt injustice enforced by the IMF left a lasting message for participants, viewers, and the press alike.
Sojourners is a partner of Jubilee USA, so I was able to attend several of these events and learned a lot about our international finance system. As I reflect on the week, I keep coming back to the words of Janet Redman from the Institute for Policy Studies, who spoke at the concluding teach-in; she reminded us that fighting debt injustice is not a matter of aid, but a simple moral obligation. As people of faith, we call for a time of Jubilee where we can finally break the chains of debt.
Hannah Lythe is a policy and outreach associate at Sojourners.