For Immediate Release: October 7, 2008

For more information, contact:

Sarah Rimmington, Essential Action (Washington, DC) (+1) (202) 387-8030 Mobile (+1)(202)422-2687

Asia Russell, Health GAP (In Geneva until Thursday October 9) (+1) (267) 475-2645

(Contact details and quotes from civil society experts follow release)

200+ Global Groups Demand IMF Policy Reform in Developing Countries Before Addressing Its Own Financial Crisis

Washington, DC - On the eve of annual meetings of the International Monetary Fund and World Bank that will focus on the global financial crisis, more than 200 health, education, faith-based, labor and development organizations from every region of the world are urging the IMF to change policies that have restricted pro-development investments in health, education and HIV/AIDS spending in developing countries before it sells some of its gold reserves to address the institution’s own financial crisis.

With many countries repaying their loans to the IMF and not seeking new lines of credit to avoid further imposition of IMF policies, the institution’s traditional means of generating income is dwindling. Facing a budget shortfall of $400 million in 2010, in April the IMF’s Executive Board tentatively approved a proposal to sell some of its gold reserves to create an endowment whose proceeds will be used to support the IMF's administrative budget. The plan cannot be implemented immediately because the U.S. Executive Director to the IMF cannot vote in favor of gold sales without prior approval from the U.S. Congress. This will delay implementation until after the next U.S. administration takes office in 2009. In the meantime, global civil society organizations wrote to the Executive Directors of the Fund today, urging them to rethink the gold sales proposal and “insist on meaningful pro-development reforms in IMF policy in developing countries, and attach conditions to how gold sales will occur.”

Signers of the letter include: Health Action International (HAI), The International HIV/AIDS Alliance, International Association of the Sisters of the Presentation, the People's Health Movement (PHM), AIDS and Rights Alliance for Southern Africa (ARASA), The European Network on Debt and Development (EURODAD), Jubilee South-Asia/Pacific, The Latin American and Caribbean Movement of HIV-Positive People, The Latin American Network for Economic Justice, ActionAid International USA, The Bank Information Center (USA), The Campaign to Reform the World Bank (CRBM – Italy), The Congress of South African Trade Unions (COSATU), Essential Action (USA), Halifax Initiative Coalition (Canada), Health Alliance International (USA), Health GAP (USA), Jubilee Debt Campaign (UK), Jubilee USA Network, Kenya AIDS NGOs Consortium (KANCO), National Union of Students of the Philippines, Norweigan Coalition for Debt Cancellation (SLUG), Treatment Action Group (US), RESULTS Canada, Japan, UK and USA, Thai Network of People with HIV/AIDS (TNP+) and World Development Movement (UK).

The letter identifies ways that IMF policies have prevented low-income countries from building up their public health systems, undermining global efforts to redress the HIV/AIDS pandemic and other critical health problems.

The letter explains that the IMF's "overly restrictive deficit-reduction and inflation-reduction targets… prevent developing countries from boosting their economic growth by expanding long-term public investments through deficit spending in key public sectors, such as the critical areas of health and education." It also notes that IMF-championed “budget and wage bill ceilings have undermined impoverished countries’ ability to provide adequate salaries for health and education workers, hire additional needed health workers and teachers, and scale up and improve the quality of the health and education sectors.”

Before implementing gold sales, the letter urges, the IMF should change these harmful policies. The letter recommends the following specific and demonstrable changes in its policy mandates and prescriptions for developing countries:

• The IMF rescind the use of overly restrictive deficit-reduction and inflation-reduction targets;
• Exempting expanded health and education spending in developing countries from IMF-imposed budget ceilings;
• Developing countries be permitted to spend foreign aid for its intended purposes (currently, for countries not meeting IMF economic targets, the Fund requires additional aid to be diverted to currency reserves or to pay down debt);
• Debt cancellation must be de-linked from harmful economic policy conditions;
• Transparency and the right to access information be strengthened at the IMF; and
• IMF practices must change to ensure national, democratic decision-making over policy-making.

The letter also urges that “if gold sales are to be implemented, a significant portion of the proceeds should be devoted to the public good of alleviating global poverty.” The civil society letter is available for download at: https://salsa.democracyinaction.org/o/1678/images/GlobalLetterFINAL.pdf

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Comments by Civil Society Experts Available for Interviews:

Joanne Carter, Executive Director, RESULTS/RESULTS Educational Fund: “The IMF continues to champion economic policies that ultimately constrain national budgets and thereby hamper countries from educating their children and reversing epidemics of tuberculosis, HIV/AIDS and other diseases. Now, facing the prospect of its own budget shortfalls, this same IMF wants to sell part of its gold reserves to pay staff and administrative costs into the indefinite future. As a condition of implementing gold sales, Congress must ensure the IMF stops promoting policies that prevent countries from having the budget space needed to meet the health, education and other critical needs of their people.” Cell: (+1) (202) 320-8269

Bhumika Muchhala, Associate, International Monetary Fund Program, Bank Information Center: "The right to access information from the IMF still lags far behind international best practices in transparency. Board meetings are closed, transcripts are withheld from disclosure, and drafts of policy and program documents are not available. Furthermore, the Fund does not employ a regular process of consultations, preceded by timely access to information, which would enable the public to participate in the IMF's decision-making process, which still has a considerable hand in shaping fundamental economic policies in many developing countries worldwide." Tel: (+1) (202) 380-6230 and bmuchhala@bicusa.org

Sarah Rimmington, Attorney, Essential Action (USA): “IMF Managing Director Dominique Strauss-Kahn has properly said that the “need for public intervention” to address the global financial crisis is “evident.” Yet the IMF has for decades worked to prevent developing country governments from intervening in their economies to advance poverty-reduction and pro-health agendas. Instead, the Fund has demanded ‘structural adjustment’ -- a series of market fundamentalist, corporate-friendly policies, including hyper-restrictive macroeconomic policies. Now, with considerable irony, the IMF would like to sell some of its gold stock to finance its own financial restructuring. These gold sales should not go forward without very specific, measurable policy changes. Specifically -- before gold sales are implemented -- the IMF must abandon its structural adjustment programs and rigid adherence to restrictive inflation-reduction and deficit reduction targets. Developing countries must be able to expand health and education spending without being subject to overall budget ceilings and deficit targets. The IMF must stop interfering with poor countries' and donor efforts to invest in health, education and poverty reduction.” Cell: (+1)(202) 422-2687

Asia Russell, Director of International Policy, Health GAP (Global Access Project): “For years the IMF has imposed disastrous conditions on poor countries that have contributed to massive underinvestment in health, HIV/AIDS and education, particularly in sub-Saharan Africa. Now the IMF wants to move forward with gold sales. Before gold sales are implemented, IMF policy must change so that poor countries can scale up spending for life saving health and education programs.” Cell: (+1)(267) 475-2645

Neil Watkins, National Coordinator, Jubilee USA Network: "IMF gold is a global public good and should be used to fight global poverty, rather  than as a blank check to fund an institution that needs serious reform.  IMF gold could help finance broader debt cancellation that impoverished countries need to address deadly poverty." Cell: (+1)(202) 421-1023

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