For Immediate Release
Dan Beeton, 202-239-1460
New Funds for IMF Approved by US Senate Would Worsen Global Economic Downturn, Economists Say
WASHINGTON - $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."
The Center for Economic and Policy Research (CEPR) was established in 1999 to promote democratic debate on the most important economic and social issues that affect people's lives. In order for citizens to effectively exercise their voices in a democracy, they should be informed about the problems and choices that they face. CEPR is committed to presenting issues in an accurate and understandable manner, so that the public is better prepared to choose among the various policy options.