For Immediate Release
Margot Friedman: 202-332-5550
Report: IMF Gold Sales Could Raise $10 Billion for Poor Country Debt Relief
As Rich Country Aid Budgets Face Threats, IMF Gold Sale Would Help Poor Countries Cope with Global Economic Downturn – At No Cost to Taxpayers
WASHINGTON - A new report released today by Jubilee USA
Network, an alliance of 75 religious, development, and human rights groups,
outlined a proposal to finance up to $10 billion in poor country debt relief
through the expanded sale of IMF gold. The report follows on messages earlier in
the week from African leaders to the G-20, urging world leaders to sell some of
the IMF's gold to cushion Africa from the global economic crisis.
The report comes two weeks ahead of the G20 summit in London
on April 2. Leaders are likely to agree on expanded resources for the IMF's
crisis lending, but they have not yet agreed on ways to channel development
assistance to low-income countries, which the IMF estimates will need in excess
of $25 billion in new assistance to weather the global crisis.
"With more than 50 million people in the poorest
countries of the world headed into poverty through no fault of their own,
expanded poor country debt cancellation is urgently needed - and IMF gold can
help pay for it," said Neil Watkins, Executive Director of Jubilee USA
Network, and the report's co-author. "The IMF has a golden opportunity to
help the poor in this time of crisis by selling a small, additional amount of
its gold to finance low-income country debt cancellation."
The report calls on the IMF to sell an additional,
equivalent amount of its gold to the amount it has already proposed to sell for
its administrative costs, raising $10 billion over six years. If this proposal
were agreed to by the spring meeting of the IMF/World Bank in April, and
implemented by the time of the G-8 summit in early July, more than $500 million
in poor county debt write offs could be financed by the end of the year,
helping to ease the impact of the crisis on the world's poorest.
"IMF gold sales could have a huge impact on some of the
world's most impoverished countries. Kenya, for instance, would see $825
million in debt payments over the next five years wiped out with this proposal,"
said Watkins. "Debt relief would enable significant investment in health,
education, clean water, infrastructure and other urgent social needs."
There is a particular role for the US Congress to play in
this debate. By law, the U.S. Executive Director to the IMF cannot support gold
sales until Congress approves them. The US Treasury Department has indicated
its intent to submit a request to authorize IMF gold sales to Congress.
Indeed, the House Financial Services Committee under the
leadership of Chairman Barney Frank (D-MA) has indicated its support for
additional IMF gold sales for debt relief. In a report issued by the committee
in early 2008, members wrote: "the Committee believes some additional gold
sales would be appropriate to help finance debt relief for additional poor
countries that are not already eligible for the debt cancellation approved
under the current initiatives."
Concerns about the impact of such a sale on the price of
gold are addressed in the report. The report proposes the sale be performed in
conjunction with the current IMF proposal for gold sales, but that the sale
occur over a timeframe of six years rather than the three year timeframe
proposed by the IMF. This would mean that the amount of gold entering the
market would remain the same as it was in the IMF proposal, reducing possible
concerns about an impact on the gold price.
Download a copy of the report here.
Jubilee USA Network is an alliance of more than 80 religious denominations and faith communities, human rights, environmental, labor, and community groups working for the definitive cancellation of crushing debts to fight poverty and injustice in Asia, Africa, and Latin America.