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Activists demand debt cancellation on sidelines of IMF, World Bank meetings

MANILA-Activists gathered on the sidelines of the annual meeting of the IMF and World Bank in Washington DC today to demand “deep, wide and urgent debt cancellation” for Global South countries. Demonstrations were also held in the Philippines, Pakistan, Bangladesh, Sri Lanka and Nepal.

“While these meetings of the IMF and World Bank are happening, a worsening debt crisis is crushing developing countries across the world. This dire situation is proof of the flawed and futile debt relief schemes of the G20 that the IMF and World Bank avidly support and promote,” said Lidy Nacpil, coordinator of Asian Peoples’ Movement on Debt and Development (APMDD).

Nacpil said the debt problem is not only about liquidity but a systemic problem requiring systemic changes.

“For eight decades, the IMF-WB has been instrumental in shaping an international financial architecture that systematically extracts the wealth of the Global South, perpetuating a cycle of indebtedness, poverty, and environmental degradation,” said Nacpil. “Then and now, they are major actors in exacerbating both the climate and debt crisis, as they persist in fossil fuel lending and in pushing more loans for climate action.”

She added: “We call out the hypocrisy of the IMF and World Bank in pushing for debt relief measures when they exempt themselves from participating in those very schemes to protect their credit ratings. They have not lifted a finger to compel the participation of commercial and private lenders in public debt reduction, knowing the heavy burden that this represents for developing countries. They have also never owed up to their responsibility for the damaging impacts of their loans, from propping up corrupt, repressive regimes and violating human rights to fueling the climate emergency,” added Nacpil.

Last year, the United Nations reported that almost 40 percent of the developing world is in debt distress. Global public debt reached a record $92 trillion, of which developing countries shoulder 30 percent. Calling the situation as “nothing less than a development disaster,” UN Secretary-General António Guterres warned that 3.3 billion people suffer from their governments’ need to prioritize debt interest payments over “essential investments” in the Sustainable Development Goals or the energy transition. He insisted that the catastrophic levels of public debt in developing countries are a “systemic failure” that resulted from colonial-era inequality built into “our outdated financial system”.

The protesters also called for the cancellation of debts related to fossil fuel projects.

Mae Buenaventura of APMDD, said the IMF and WB’s lending for coal, oil, and gas extraction and infrastructure projects across the Global South is contributing to increasing greenhouse gas emissions and accelerating climate change. These projects in turn have caused forced displacement, loss of livelihoods, and destruction of ecosystems, exacerbating social inequalities and perpetuating cycles of poverty and vulnerability in the Global South.

“If the IMF-WB’s avowed shift away from fossil fuels is to have credibility, they must cancel their loans for fossil fuel projects, which are illegitimate, and leverage their resources to compel other lenders to do the same. We assert the illegitimacy of fossil fuel loans, some of which have been paid fully over the decades despite their harmful impact on people and communities now and in the future,” she added.

Asia-wide actions vs. the IMF-World Bank

In Pakistan, a group of around 50 protesters gathered at the National Press Club in Lahore calling for debt cancellation. Farooq Tariq, General Secretary Pakistan Kissan Rabita Committee said IMF conditionalities imposed on Pakistan have been strictly enforced without considering the massive loss of life, livelihoods and public funds from the devastating floods of 2022. Over 4 million people still reside in roadside camps, and millions of children are still without access to safe drinking water.

“The IMF and the WB persist in pushing loans as the answer to multiple crises but the solutions they promote have only contributed to worsening the debt problem. We need debt cancellation now so that our government does not have to make a choice between servicing Pakistan’s debts or fighting poverty, hunger and climate change,” he pointed out.

In Sri Lanka, the first Asian country to declare bankruptcy during the pandemic, protesters gathered near the IMF office in Colombo to call out austerity conditionalities attached to the Fund’s bailout loan negotiations with the government. Rising reports of hunger and unemployment, as electricity prices skyrocket, run counter to IMF reports of progress. Previously, CSOs and trade unions condemned the IMF consultations as “cosmetic”, as the odious debts incurred by the previous administration and the call for debt cancellation of these illegitimate debts have not been seriously considered.

“The failure of the IMF-WB to provide effective pathways out of the debt crisis is the reason why developing countries like Sri Lanka are in debt distress,” said Dilena Pathragoda, Executive Director of the Center for Environmental Justice based in Colombo.

IMF conditionalities imposed on Sri Lanka for the IMF bailout, such as market pricing of energy, cuts to subsidies, rise in indirect taxes, and cuts to social welfare have caused poverty rates to soar. According to the World Bank, an estimated 25.9 percent of Sri Lankans were living below the poverty line in 2023.

In the Philippines, around 200 demonstrated in front of the Finance Department in Manila where the IMF Resident Representative holds office. Although the Philippines is no longer under an IMF lending program, the austerity conditionalities that the Fund imposed in the past continue to hit low-waged workers and ordinary consumers in the form of regressive taxes and privatized social services. The group scored IMF and World Bank-supported debt relief schemes as “false solutions” for paying no heed to growing inequality and poverty in middle-income countries such as the Philippines.

In 2022, the World Bank Group’s International Finance Corporation (IFC) was implicated in a complaint for providing loans and equity to a commercial bank that finances the expansion of 19 coal plants in the Philippines. Its own Compliance Advisor Ombudsman called on the IFC to remedy the social, environmental and climate damages and reform its lending practices to financial intermediaries.

In Bangladesh, demonstrators trooped to the National Press Club in Dhaka protesting IMF’s $4.7 billion stabilization package and the conditionalities attached, such as raising Value Added Taxes , removing power subsidies and increasing fuel and electricity prices. The third country in Asia to seek IMF assistance in 2022, Bangladesh’s foreign debt rose by 238 percent from 2011 to almost $100 billion in 2021. It was recently extended a $4.7 billion loan by the Fund.

“Without adequate safety nets, the cost of living crisis, stagnant wages and unemployment, are grinding people down,” said Badrul Alam, president of Krishok Foundation, the largest peasant organization in Bangladesh.

Campaigners in Nepal staged an action near the World Bank office in Kathmandu. Nepal, one of the world’s most vulnerable countries to climate change, was one of the first countries to apply for loans under the Climate Investment Fund of the World Bank. In 2022, the government signed a $100 million loan with the World Bank for “green, resilient and inclusive development”.

“This is a prime example of how countries that contributed the least to the climate emergency, such as Nepal, are unjustly being made to bear the cost of climate action, a responsibility of rich countries that international financial institutions are helping them to evade. We demand grants, not loans,” said Praman Adhikari, Advocacy and Campaigns Officer of the South Asia Alliance for Poverty Eradication based in Kathmandu. (APMDD)

Photo by Elmer Valenzuela 



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