Civil Society Organizations Urge End to IMF Surcharges "to Finance Climate Action" Instead

Over 300 civil society organizations and individuals from around the world are calling on the International Monetary Fund (IMF) to immediately end interest rate surcharges on its lending to its most indebted borrowers as part of a commitment to combatting the climate crisis. The groups, which include 350.org, Oxfam International, the International Trade Union Confederation, Eurodad, Latindadd, and the Institute of Analysis and Advocacy of Ukraine, sent a letter to the IMF Executive Board today, noting "Discussions at COP again emphasised the dire need for climate finance to be made immediately available and for what the [Vulnerable 20 Group] calls a 'fit-for-climate' global financial system." But the groups note that in a context of rising interest rates for borrowing countries, they are projected to pay almost $8 billion in surcharges to the IMF by 2028 -- resources "that should be used to finance climate action" instead.

"The Fund has sought to present itself as in the leadership in the fight against climate change, and to differentiate itself from World Bank leadership that has rightly been called out for failing to meet the moment and for actually questioning the science around climate change," Luiz Vieira of the Bretton Woods Project said. "But the Fund's actions have failed to live up to its words, and its surcharges policy is a clear example where the IMF is putting itself before people and the planet."

The letter comes just days after the conclusion of the COP27 in Sharm El Sheikh, Egypt. Environmental groups have criticized the conference for failing to secure commitments from major greenhouse gas emitting countries on the scale needed to respond to the climate crisis.

The letter notes that the Fund has also failed to respond to an August 26 letter from nine United Nations human rights independent experts and special rapporteurs. That letter asked the Fund to "explain the legal basis and economic rationale of applying the surcharge policy on countries that are facing severe fiscal constraints ..." and to note whether human rights due diligence or gender impact assessments have been carried out in reviewing the surcharge policy. That letter also sought clarification on human rights considerations in IMF agreements with crisis-hit countries. It asked the Fund to detail how it sees its interest rate surcharges affecting countries' ability to realize their populations' economic, social, and cultural rights, and how it sees surcharges affecting countries' ability to respond to economic shocks in the future.