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Dan Beeton, 202-239-1460
New Funds for IMF Approved by US Senate Would Worsen Global Economic Downturn, Economists Say
WASHINGTON - May 22 - $108 billion in new funds for the International Monetary Fund (IMF) approved by the U.S. Senate yesterday is not likely to help developing countries counter the world recession, according to economists at the Center for Economic and Policy Research (CEPR). Contrary to remarks by IMF Managing Director Dominique Strauss-Kahn that rich country contributions to the IMF make "this...the most coordinated stimulus ever," the IMF has been mandating economic conditions for countries receiving new loans, including deficit reduction, monetary tightening, and inflation-targeting measures that run counter to the worldwide need for an increased economic stimulus.
"The only reason that the IMF is getting this money is that no one in the House of Representatives is going to have to vote for it," said economist and CEPR Co-Director Mark Weisbrot, who also noted that given the IMF's track record and recent loan agreements, "Throwing $108 billion at the IMF without any reforms is a mistake, and one that Americans will later regret."
In what media reports and observers see as an effort to limit debate and scrutiny, the White House has attempted to obtain the new money for the IMF through back channels by attaching it to the war supplemental bill in the Senate. The House version of the bill does not include the IMF funds, and attaching the IMF funding in conference is likely to face strong opposition from many representatives.
Yesterday, thirty-three Democratic members of the House sent a letter to Appropriations Chair David Obey and Foreign Operations Subcommittee Chair Nita Lowey outlining legislative language that should be included to ensure the IMF uses the funds to facilitate economic stimulus in recipient countries, instead of pro-cyclical conditions. The letter also urges that transparency and governance reforms be required of the IMF, and that a portion of revenue from planned IMF gold sales be used for debt cancellation or grants for the poorest countries.
"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," Weisbrot said. "Giving the IMF this money without reform conditions is a mistake, and one that will come back to haunt us in the future."