May 22 2009

Health GAP • RESULTS • Jubilee USA Network • CEPR • New Rules for Global Finance • Africa Action • Essential Action • Gender Action • United Methodist General Board of Church and Society

Contact: Asia Russell, Health GAP: +1 267 475 2645
asia@healthgap.org

Senate signs $108 billion ‘blank check’ for IMF
Without key reforms, IMF expansion will continue to worsen recessions in recipient countries

Today the US Senate voted to give a blank check to the IMF in approving $108 billion for IMF expansion while failing to include crucial reforms that would have ensured that the funding achieve its stated goal of global stimulus, said a coalition of health, education, poverty and development organizations.

This funding was presented as necessary to stabilize the economies of developing countries through the availability of new IMF loans to facilitate global stimulus. However, the vast majority of the IMF’s loans made since the onset of the current economic crisis impose conditions that are the opposite of stimulus spending, such as: deficit reductions--including freezes in stimulatory social spending and unemployment benefits, tax increases and service rate hikes--and interest rate increases, which stifle growth.

Leadership by Senator Brown (D-OH), as well as Senators Lugar (R-IN) and Leahy (D-VT) resulted in attempts to amend the spending package to reduce its potential for harm. However, fundamental flaws remain in the Senate's final bill.

The civil society organizations called on Senate and House leadership to amend the bill in the House-Senate Conference in order to include clear requirements that would ensure US funding for the IMF will help countries respond to the economic crisis with stimulus spending, and would increase the transparency of the institution.

Below are reactions from civil society organizations to the Senate's passage of the IMF spending package:

“We are facing the greatest economic crisis in eighty years, the extent of which is still not clear. The current crisis has
demonstrated the deep flaws in the present global economic governance system. Reform of the IMF is urgently needed. Congress should use this opportunity to insist upon necessary reforms with respect to transparency, accountability and the IMF's still-harmful policy prescriptions.” Jeff Vogt, Global Economic Policy Specialist, AFL-CIO, (202) 637-3904

"By passing legislation without conditions to ensure that new funding will result in global stimulus, Congress risks creating further drag on the global economy and exacerbating the recessions in recipient countries. Lawmakers must take action in the House-Senate Conference to ensure that the IMF will not subject countries to unnecessary, contractionary conditions that will cause further increases in unemployment, disease, poverty and hunger." Asia Russell, International Policy Director, Health GAP, (267) 475 645

"Congress must not miss the first opportunity in decades to ensure meaningful reform of the IMF. In these critical economic times, developing countries cannot afford more of the IMF's same-old belt-tightening policies and conditions. Senator Brown fought hard for protection of critical health and education spending against overly austere policies, and that provision must be further strengthened in conference. Unless the conferees require real change in the IMF's policies, the IMF will be granted a $108 billion blank check that will place further duress on already struggling nations and reverse hard-won progress on health and education." Joanne Carter, Executive Director, RESULTS, (202) 320-8269

"Much remains to be done to ensure Congress really uses its leverage to insist on meaningful reforms at the IMF. We are counting on House Speaker Nancy Pelosi, and Reps. David Obey and Nita Lowey to lead the charge for strengthened reform provisions in conference,” Neil Watkins, Executive Director, Jubilee USA Network, (202) 421-l023

"It's got to be a bad thing when the U.S. Congress allocates $108 billion to an unaccountable, unreformed institution without any debate or hearings or a normal legislative process. The only reason they are getting this money is because Treasury manipulated the process so that nobody in the U.S. House of Representatives will have to vote for the money. There's little evidence that the IMF has actually helped boost GDP growth in developing countries over the past 30 years, and a lot of evidence to the contrary. Giving the IMF this money without reform conditions is a mistake, and one that will come back to haunt us in the future." Mark Weisbrot, Co-Director, Center for Economic and Policy Research (CEPR), (202) 746-7264

"Like the U.S., developing countries need stimulus spending to get their economic ‘motors’ running again. However, the IMF is a deficit hawk, and requires that countries rein in spending, even in recessions or depressions such as they are experiencing now. Whereas the U.S. and other industrialized countries pay no heed to the IMF’s advice, the IMF actually has a choke-hold on the policies of many developing countries,” Nancy Alexander, New Rules for Global Finance, (202) 277-9390

"It makes no sense to provide money intended to support global stimulus spending to the IMF when the IMF is demanding developing countries employ recessionary policies. It is vital that the House-Senate conference impose conditions on the US funding to ensure that the IMF lets developing countries employ the same expansionary policies now being undertaken by the rich countries." Robert Weissman, Director, Essential Action, (202) 360-1844

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