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Note: This document is from the archive of the Africa Policy E-Journal, published
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Africa: Debt, IMF and US Congress
Africa: Debt, IMF and US Congress
Date distributed (ymd): 991106
Document reposted by APIC
+++++++++++++++++++++Document Profile+++++++++++++++++++++
Region: Continent-Wide
Issue Areas: +economy/development+ +US policy focus+
Summary Contents:
This posting contains an urgent action alert from the Jubilee
2000/USA coalition calling for immediate pressure on members
of the US Congress to secure approval for revaluation of
gold stocks by the International Monetary Fund for a dedicated
acount for debt relief. Jubilee 2000/USA reports that the
latest proposal, if approved, will -- unlike earlier proposals
-- not provide additional funds for IMF structural adjustment.
And, as explained in a September press release from Jubilee
2000/UK, this is also an entirely different proposal than
earlier moves for IMF sales of gold stock, which was opposed
by gold producing countries such as South Africa.
[Note to non-U.S. readers: Although the call for action
contained below is appropriate for US residents, this
posting is provided both for your background information and
for possible forwarding to those of your US contacts you
think would be interested.]
+++++++++++++++++end profile++++++++++++++++++++++++++++++
JUBILEE 2000/USA ACTION ALERT!
For more information contact
Jubilee 2000/USA
222 East Capitol Street, NE
Washington DC 20003-1036, USA
Tel: 1-202-783-3566; Fax: 1-202-546-4468
E-mail: [email protected]
Web: http://www.j2000usa.org
CALL YOUR SENATORS BEFORE MONDAY AT 3PM!
CALL REP. DICK ARMEY'S OFFICE!
Decisions this week in Congress mainly did not go our way (see
below). BUT, there is still a chance to get Congressional
approval for a small, **yet extremely vital**, debt relief
measure, one that enables relief of $2.3 billion in debts owed
the IMF (International Monetary Fund) by 36 impoverished
countries. That may sound small but, actually, this would be
an important foot in the door, and it would do a lot to
encourage similar actions by other wealthy governments.
==> That's why it's urgent that you call (and ask members of
your group to call) your Senators, Senate leadership, and Rep.
Dick Armey to say:
I want Congress to authorize the IMF to use resources it
already has to finance debt relief.
I want Congress to authorize the IMF to revalue its gold
stocks in order to make more debt relief possible
[Please note that this would *not* lead, under an agreement
reached Wednesday, to financing for the IMF's structural
adjustment lending program. Rather, the money would go into
a dedicated account for debt relief.]
The U.S. is the only country that belongs to the IMF that
hasn't yet granted the necessary approval (under the Cologne
Debt Initiative) for the IMF to relieve debt. In fact, the
entire Cologne agreement is riding on what Congress does
before it adjourns. If the IMF is not able to relieve debt,
the entire Cologne debt program could be jeopardized.
Jubilee 2000/USA considers current official debt relief
programs, which came out of the June 1999 G7 Summit in
Cologne, Germany, to have shortcomings. The Campaign is
committed to remaining vigilant in matters of implementation
of this Initiative and to demanding the expansion of debt
cancellation measures even further, to benefit enough
countries and in accordance with our Platform. Yet, the
Initiative is an important step forward.
ACTION - ACTION - ACTION - ACTION:
House Majority Leader Dick Armey is one key to getting
Congressional approval of IMF debt cancellation. THIS IS AN
URGENT PLEA to flood Armey's office with calls. (Calls are
vital from any and everyone. But, know anyone in living in
Armey's district in the Dallas TX suburbs? Call them [or email
them] and ask them to call too)
Washington office: (202) 225-7772 (leave a message is
necessary) District office: (972) 556-2500
Call your Senators BEFORE MONDAY AT 3:00PM EDT, and urge them
to amend the Foreign Aid bill on the floor to authorize the
revaluation of IMF gold and the transfer of funds within the
IMF in order to pay for debt relief. Neither of these come at
any additional cost to the US taxpayer, so it shouldn't throw
off the rest of the foreign aid agreement if this is added.
Capitol Switchboard: (202) 224-3121
More contact info at http://www.senate.gov
Background:
Administration and Congressional negotiators agreed on a
foreign aid package Wednesday night [November 3]. The
agreement includes full funding for the Wye River Middle East
Peace Accord, and added funding for Kosovo, an additional $150
million for development assistance [for IDA funding], another
$75 million for peacekeeping and another $90 million for debt
relief with the requirement that it be spent only on bilateral
(owed just to the US) debt reduction.
Following is a quick assessment of what the debt relief
provisions mean:
Debt Relief -- What Happened, What Needs to Happen:
Measure Request by Clinton Agreement to date by Congress
Portman rainforest $50 million $13 million
Bilateral (HIPC Countries) $110 million $110 million
HIPC Trust (Multilateral) $210 million $ 0
Allow IMF to revalue gold authorize no authorization given
SCA-2 (transfer of funds
within the IMF
to pay for debt relief) autorize no authorization given
Total for FY2000 $370 million $123 million
The President's full request was for the Congress to also
provide an advance appropriation for the next three years of
an additional $600 million to cover the next three years.
What this budget does is to provide bilateral relief needed
for countries that will be coming forward for HIPC debt relief
for next year only (about 29), but there is no multilateral
relief financing at all. Congress only approved (see above)
$123 million and only for bilateral debt relief.
This, along with with the fact that -- unless the Senate
rescues this bit on Monday -- we lack the authorizations for
the IMF gold revaluation and for the transfer of funds the IMF
means that the agreements in Cologne may fall through. That's
because it is highly unlikely that other major creditors like
France, the UK, Germany and Japan will go ahead with providing
debt relief to these countries without the IMF being able to
also cancel debts owed to it. (The US has about an 18% vote
in the IMF - and a vote of 85% of the IMF Board is required to
approve these things - so the US effectively blocks action
unless the authorization is granted from Congress.) The
Administration has made clear that it wants to leverage relief
via such international initiatives, and will not be providing
debt relief on its own.
This is reposted from the Jubilee2000 USA e-mail list. To
subscribe to that list send an empty email message to
[email protected] For full campaign news
visit http://www.j2000usa.org
eGroup Home: http://www.egroups.com/group/j2000-usa-news/
http://www.egroups.com - Simplifying group communications
[Jubilee 2000 Coalition-UK:
http://www.jubilee2000uk.org/news.html]
September 7, 1999
IMF takes Jubilee 2000 advice and agrees to revalue gold
After three years of claiming that the idea was foolish and
impossible, the IMF has suddenly reversed its position and
accepted the view of Jubilee 2000 and other campaigners that
it should revalue its stock of gold. This would provide more
than enough extra capital to write off all of the debts of
poorest countries to the IMF.
"It's a cruel joke for the world's wealthy governments to
protest that they can't afford to cancel the debts," wrote
Jeffrey Sachs in a June article for Jubilee 2000. "The IMF is
sitting on $22 billion of unrealized capital gains on its gold
reserves, since it values its gold at $47 per ounce rather
than the true market value of $262 per ounce."
Part of the IMF's capital base is 3217 tonnes of gold. The IMF
had planned to simply sell some of this gold to pay for its
share of HIPC debt cancellation. But opposition by gold
producers and by the United States Congress meant that
approval for gold sales seemed increasingly unlikely.
Jubilee 2000 and other analysts had frequently said that it
was not necessary to resell the gold -- giving the gold a
realistic value would be enough. The IMF repeatedly said that
the idea was impossible. But on Monday 7 September the Dutch
finance ministry announced that the IMF had decided simply to
revalue the gold.
According to an analysis by the US financial news service Dow
Jones, the IMF plans to use a sale and repurchase as its way
of revaluing gold. The plan is to sell 10 million ounces of
gold -- just over 300 tonnes, or one-tenth of the gold reserve
-- but to sell the gold to central banks at market value, then
immediately buy back the gold at that same price. Those 10
million ounces are thus revalued from $46 an ounce to $256 an
ounce, an increase of $210 an ounce, which increases the IMF's
reserves by $2.1 billion. This process does not affect the
gold market or the gold price, because the gold never enters
the market. The extra reserves are then invested and the
proceeds are available for use.
Although the proposal to revalue gold has been well received,
the entire process is still subject to substantial criticism.
Much of the new money will not be used for debt relief, but to
fund new IMF structural adjustment lending under the ESAF
programme. Many campaigners and development groups, especially
in developing countries, oppose ESAF, and will campaign to
require the IMF to use the money to cancel loans rather than
fund further structural adjustment.
This material is being reposted for wider distribution by the
Africa Policy Information Center (APIC). APIC's primary
objective is to widen international policy debates around
African issues, by concentrating on providing accessible
policy-relevant information and analysis usable by a wide
range of groups and individuals.
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