WASHINGTON - International Monetary Fund (IMF) loans and policies have led to
a dramatic increase in deforestation in biologically rich nations in Africa, Asia,
and Latin America, according to a new analysis.
Environmental groups have long argued the Fund's structural adjustment policies
have led to an increase in logging exports and have encouraged cuts in government
spending on forest protection.
The new report, by the American
Lands Alliance, said the argument still holds true and the Fund continues
to fuel logging in endangered forests in Brazil, Cameroon, Central African Republic,
Chile, Ecuador, Ghana, Honduras, Indonesia, Ivory Coast, Madagascar, Nicaragua,
Papua New Guinea, Russia, and Tanzania.
''The IMF's formula of promoting export-led growth and foreign investment,
while simultaneously pressuring countries to slash funding for environmental programs,
has been a recipe for accelerated deforestation,'' said Jason Tockman, director
of the organization's international trade program.
IMF spokesperson William Murray told IPS the report seemed to be based on
incorrect and old information.
Murray said American Lands ignored that the Fund has attached forest policy
reform requirements - aimed at curbing illegal logging and strengthening forest
protections - to some lending packages.
The IMF, he said, has even halted lending in recent years in several countries,
including Cambodia and Papua New Guinea, to stop illegal logging and deforestation.
''If the government is encouraging deforestation, that's when we step in to
stop it,'' said Murray. ''Clearly the IMF does not promote deforestation.''
The 23-page American Lands report, however, said that forest policy reforms
aside, the Fund has failed to understand or adequately assess the broader environmental
impact of its structural adjustment policies.
In Brazil, for example, the government reduced spending on environmental programs
by approximately two-thirds, as part of a 41.5 billion dollar emergency loan package
signed with the IMF in 1998, said the report.
As a result, the budget for the Ministry of the Environment, it said, amounted
to less than three percent of the approved budget, preventing the implementation
of 10 out of 16 environmental programs in Brazil.
Many of the programs cut had been designed to address enforcement of logging
and forest protection laws in Brazil, whose rainforests comprise about one-third
of the remaining tropical forests in the world.
As much as 80 percent of the logging that occurs in Brazil's Amazon is illegal,
said the report. Between 17,000 and 20,000 square kilometers of forest is destroyed
each year by illegal logging and farming. Brazil's economic crisis has further
stimulated illegal logging and land clearing, it said.
''These accelerated levels of illegal logging, combined with a regulatory
agency without the budgetary resources to protect natural resources, has worsened
the prospects for Brazil's forests,'' said the report.
According to the report, the IMF caused Cameroon, one of the most biologically
diverse countries on the African continent, to devalue its currency and cut export
taxes on forest products in the mid-1990s.
''This made logging more profitable, and the larger number of species that
became commercially viable resulted in higher volumes being logged per hectare,''
said the report.
As a result, the number of logging firms operating in Cameroon increased substantially,
from 177 to 479 between 1990 and 1998 (compared to only 106 in 1980), it said.
More than 75 percent of the country's forest cover has been logged or is scheduled
to be, it said.
In the Central African Republic, the IMF encouraged the government to increase
exploitation of forest and mineral resources. This helped increase the total log
production three-fold from 1993 to 1999, said the report. Settlers and poachers,
in turn, gained access to new areas via new logging roads, it said.
''This resulted in tragic consequences for the Central African Republic's
populations of gorillas, elephants, and rhinos,'' it said. Continued human encroachment
and illegal poaching, according to the report, threaten survival or two species
of endangered gorilla - the western and lowland gorillas.
Structural adjustment programs in Papua New Guinea, said the report, pressured
the country to reduce government spending and the size of the civil service, resulting
in the ''deconstruction'' of the Department of Environment and Conservation.
At the same time, the country had taken several steps recently to foster the
timber industry, including reducing its tax on log exports from 33 percent to
0 - 5 percent in 1998, said the report.
''Papua New Guinea's ability to manage its forests and control logging has
been impeded by this reduction,'' it said.
Malaysian logging companies, said the report, quickly moved to take advantage
of these new laws in Papua New Guinea, a country that provides habitat for 200
species of mammals, 20,000 plant species, 1,500 species of trees and 750 species
of birds, half of which are endemic.
The report said global protection of forests would not be possible without
either a ''fundamental transformation'' of the approach taken by the IMF, or the
removal of its ability to promote and impose policies that harm forests.
It recommended that U.S. lawmakers instruct the Treasury Department to oppose
IMF loans, grants, documents, and strategies that include policies that lead to
It called on the international financial institution to conduct environmental
assessments of all activities and policies and urged the Fund and its member nations
to work towards the elimination of logging subsidies and other financial incentives
that lead toward logging and forest destruction.
''Immediate action needs to be taken,'' it said.
Frances Seymour, program director for institutions and governance at the Washington-based
World Resources Institute, added
that under the right conditions the IMF and its sibling agency, the World Bank,
could use their lending packages to promote environmental protection by including
forestry policy reforms in structural adjustment loans.
In Indonesia, for example, the World Bank and IMF used structural adjustment
lending to spotlight poor governance in the forest sector and forced the dismantling
of forest product monopolies, said Seymour. Loan provisions also required the
government to make public new maps of forest areas and to initiate "multi- stakeholder"
consultations in which all proposed regulations and reforms would be publicly
However, Seymour cautioned that the ''right conditions'' - including strong
internal World Bank and IMF support for such measures and the willingness to bring
up forest issues with the borrowing countries - are rare.
Copyright 2002 IPS