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New IMF Chief Urged to Reform Body to Help Poor

Haider Rizvi

NEW YORK - Calls for substantial changes in loan conditions for poor countries are on the rise as the new International Monetary Fund (IMF) chief prepares to take office next month.

In a letter sent to the incoming IMF director general Dominique Strauss-Khan, numerous civil society groups said they want him to reshape IMF policies in developing countries burdened with foreign debt.1010 08

Strauss-Khan, a former French finance minister, has said he is willing to introduce "institutional reforms," but appears to have failed in convincing critics that his words are meant more for action than mere rhetoric.

"It is unconscionable that IMF policies force governments to siphon additional aid away from health ministries," said Marie Clarke Brill of Africa Action, a U.S.-based lobbying group leading the civil society campaign for IMF reforms.

Brill and other critics seem particularly concerned about the devastating impact of IMF policies on the response to the HIV/AIDS epidemic in poor countries, especially those in sub-Saharan Africa.

The world community wants to see universal access to HIV/AIDS treatment by 2010, a target that is unlikely to be met, given the current level of spending on health and education in a number of the poorest countries.

UN officials have repeatedly warned of the impending failure to accomplish the Millennium Development Goals (MDGs), although they have also indicated that some important successes have been achieved in certain areas.

The MDGs include a 50-percent reduction in extreme poverty and hunger; ensuring access to primary education for all the world's children; reduction of child mortality by two thirds; cutbacks in maternal mortality by three quarters; the promotion of gender equality; and the reversal of the spread of HIV/AIDS, malaria, and other deadly diseases; all by 2015.

World leaders agreed in 2000 to commit the economic and political resources necessary to achieve these goals over the 15-year span, which reached its midpoint this year.

As an internal IMF report points out, between 1999 and 2005, there were as many as 29 countries in the sub-Saharan region that were forced to spend about 74 percent of additional foreign aid to pay national debts and to maintain international currency reserves.

If those countries in Africa were not obligated to follow strict IMF policies regulating debt repayment and other monetary policies, they might have been able to spend more on health and education, according to activists who signed the letter.


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The IMF internal review report released last February acknowledged that in Africa its work has been confused and vague, lacked transparency, and suffered from a large gap between rhetoric and practice.

"The Fund should be clearer and more candid about what it has undertaken to do, and more assiduous, transparent, and accountable in implementing its undertakings," said the report prepared by the Independent Evaluation Office.

Covering the period between 1999-2005, the report noted that, despite "improved macroeconomics performance" in a number of African countries, there was almost no change in the share of the population living in poverty.

"The resulting disconnect has reinforced cynicism about, and distrust of, the Fund's activities" in low-income and poor countries, the report's authors said at the time, adding that the IMF staff "has done little to analyze additional policy and aid scenarios and to share the findings with the authorities and donors."

"They have not been proactive in mobilizing aid resources, a topic where the Board remains divided, and Fund policy -- and operational guidance to staff -- are unclear," said the authors, noting that because of those problems, social development targets were often given short shrift.

"Lacking clarity on what they should do on the mobilization of aid, alternative scenarios, and the application of poverty and social impact analysis, IMF staff focused on macroeconomics stability, in line with the institution's core mandate and their deeply ingrained professional culture."

The civil society activists who signed the letter called for the IMF to remove obstacles for poor countries to increase spending on health, HIV/AIDS, and education, and to take immediate steps for debt cancellation.

"If Mr. Strauss-Khan is serious about IMF reforms," said Brill, "these issues must be at the top of his agenda."

Brill and others also said they wanted Strauss-Khan to take action on reforms within the first 100 days after taking charge as the new IMF head. Strauss-Khan is due to start his new job November 1.

In addition to Africa Action, major non-governmental organizations that signed the letter included ActionAid, Health GAP, Essential Action, RESULTS, and the Student Global AIDS Campaign.

© 2007 One World

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