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Campaigns & Activities

IMF Gold Windfall Should Serve the Poor, Urge Global Development Advocates
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The International Monetary Fund recently reported windfall profits of $2.8 billion from the sale of 403.3 tons of gold. In a joint statement with leading global civil society networks, STWR calls for the proceeds to be used to cancel the debts of poor countries facing crises outside their control.


4th April 2011 - Published by Jubilee Debt USA

The International Monetary Fund (IMF) board will meet this week to discuss how to use an extra $2.8 billion in windfall profits from selling 403.3 tons of gold [1]. 

Fifty-eight leading global civil society networks – including ActionAid International, Oxfam International, ONE, the International Trade Union Confederation, and global Jubilee networks – are calling on the governments that control the IMF to direct the billions in windfall to cancel the debts of poor countries facing crises outside their control. [2]

The windfall comes in addition to $7 billion in expected gold sales revenue already planned to cover the Fund’s administrative budget, as well as projected profits this year of $500 million [3] from IMF lending to countries in crisis, such as Ireland.

The Fund’s board will consider the following broad options for the $2.8 billion gold windfall:  (1) absorb it into an endowment for ongoing operating expenses such as building refurbishment  (2) add it to precautionary reserves for potential future use or (3) use it to assist low-income countries recovering from multiple crises.

Melinda St. Louis, Jubilee USA’s Deputy Director, stated:

”The IMF’s finances are in much better shape than when they agreed to sell this gold, with their profits from lending and the price of gold now both sky-high. Yet, the world’s poorest countries aren’t faring quite so well. They face potential starvation with food prices spiking again, plus mounting debts due to natural disasters or financial crisis caused by western banks.  The moral choice is clear: the IMF should use its excess money for debt cancellation and non-debt creating assistance for the poorest.”

Neil Watkins, Director of Policy and Campaigns for ActionAid USA said:

“With gold prices at record highs, the IMF should use the windfall profits from gold sales to help the poorest, not to spiff up its headquarters or stash away money in a rainy day fund. With the World Bank estimating more than 44 million people have already been pushed into extreme poverty due to rising food prices, the poorest countries desperately need the help, and they need it in a way that doesn’t fuel a new debt crisis.”

Lidy Nacpil, Coordinator of Jubilee South—Asia and Pacific Movement on Debt and Development in the Philippines stated:

“When impoverished countries face crises they had no hand in creating, the last thing they need is more IMF debt.  After Haiti’s tragic earthquake in 2010, the Fund was forced to respond to civil society outcry and cancel all of Haiti’s remaining debt.  Now that the IMF is flush with cash from gold sales, it should use those funds to cancel the debt of the poorest nations facing crises.”

Collins Magalasi, Executive Director of African Forum and Network on Debt and Development based in Zimbabwe stated:

“This is a long awaited opportunity for the IMF to cancel poor countries’ debts. The IMF has always said it lacks the money to be able to write off the debts of these poor countries. Now that there is an excess, it is only logical to use this money to cancel debts that are further crippling poor economies. For most African countries total foreign debt is a third of earnings from exports.”

Countries across the world have seen their debts increase due to the global economic downturn. During the financial crisis, Sierra Leone’s debt to the rest of the world has doubled. In 2011, the country’s government will spend more on debt repayments than it spends on healthcare. [4]

Notes:

[1] When the IMF board agreed to sell 403.3 tonnes of gold for its New Income Model in 2008, the projected price of gold was $850 per oz.  With the price of gold significantly higher as the gold was sold, the Fund realized $3.7 billion more than projected.  In 2009, the IMF board agreed to use $900 million of the windfall profits for interest relief for low-income countries, leaving $2.8 billion in remaining windfall.

[2] The common position statement by 58 civil society organizations is at: http://www.jubileeusa.org/fileadmin/user_upload/Resources/Policy_Archive/Microsoft_Word_-_Common_Position_Statement_eng_fr_ger_sp.pdf

[3] IMF. (2010). The Fund’s Income Position for FY 2011 – Midyear Review. International Monetary Fund. Washington DC. 03/12/10.

[4] IMF. (2010). Sierra Leone: Staff Report for the 2010 Article IV Consultation, First Review Under the Three-Year Arrangement Under the Extended Credit Facility, Request for Modification of Performance Criterion, and Financing Assurances Review. International Monetary Fund. Washington DC. 11/18/10. http://www.imf.org/external/pubs/ft/scr/2010/cr10370.pdf

Contact: Melinda St. Louis, Jubilee USA, 202-783-0215 or 202-441-7579, This e-mail address is being protected from spam bots, you need JavaScript enabled to view it . Neil Watkins, ActionAid, 202-421-1023, This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

TAKE ACTION: Sign Jubilee USA's petition 


Common Position Statement: IMF Gold Sales for Debt Cancellation

The International Monetary Fund completed the sale of 403.3 tonnes of gold on December 22, 2010. Given the historically high price of gold, the Fund has realized at least $3.5 billion more than it projected in 2008. In 2009, the Fund agreed to use $900 million of the windfall profits from gold sales to increase the amount of low interest lending to poor countries, and since then the price of gold has continued to climb. Even after creating the endowment for its new income model and subsidizing its low interest lending program, the Fund will conservatively realize an additional $2.5 billion in excess windfall profits.

We strongly urge the IMF to use all excess windfall profits from gold sales to fund debt cancellation and / or non-debt creating assistance for poor countries. Too many poor countries find themselves taking on new debt in the wake of natural disasters or other external shocks such as the global financial crisis.

The IMF does not need these funds for its administrative budget or for increased lending capacity, but the poorest countries now face mounting debt burdens due to the financial crisis through no fault of their own. The two year interest-relief on IMF loans that was partially funded by gold sales may have reduced interest payments for poor countries but did not provide these countries with the non-debt creating assistance that they need. The reduction in interest payments from the subsidy was marginal - an average of less than $1 million per year for countries that qualified. The $2.5 billion in excess windfall from gold sales represents another opportunity to provide debt cancellation and non-debt creating assistance that is so desperately needed by poor countries.

We urge the IMF Executive Board to expand the criteria for the Fund’s new Post-Catastrophe Debt Relief Trust Fund to provide debt relief without harmful conditions to countries in crisis, and use the gold sales proceeds to fund it. In June 2010, the IMF launched its Post-Catastrophe Debt Relief Trust Fund, which provides a two-year moratorium on debt service payments on IMF debt and considers cancellation of full debt stock for poor countries that face catastrophic disasters. The trust fund was initially funded through internal IMF resources, and was used to cancel all of Haiti’s debt stock to the Fund in the wake of its January 2010 earthquake. Currently the Trust Fund has a mere $154 million, and has such narrow criteria that only a very small country facing a catastrophe on the scale of Haiti’s earthquake can qualify. The Executive Board should expand the criteria for the Debt Relief Trust Fund to include crises created by other external economic shocks, to be able to provide debt cancellation and grantequivalent assistance in response to such crises. The Board should then commit its excess windfall profits from gold sales to capitalize the Trust Fund and/or other non-debt creating, unconditional assistance for poor countries.

International Networks:
ActionAid International
International Trade Union Confederation (ITUC)
ONE
Oxfam International
African Forum and Network on Debt and Development (AFRODAD)
European Network on Debt and Development (EURODAD)
Feminist Task Force GCAP (Global Campaign Against Poverty)
GCE Global (Global Campaign for Education)
Jubilee South - Asia/Pacific Movement on Debt and Development (JS-APMDD)
Latin American Network on Debt and Development (LATINDADD)
End Water Poverty
Passionists International
Third World Network

National Organizations/Networks:
11.11.11, Belgium
Abibimman Foundation, Ghana
Alliance for Global Justice, USA
American Jewish World Service, USA
Bretton Woods Project, UK
Catholic Agency for Overseas Development (CAFOD), UK
Center of Concern, USA
Centre for Youth Development Advocacy (CYDA), Ghana
Centre National de Coopération au Développement, Belgium
Columban Center for Advocacy and Outreach, USA
Committee for the Abolition of Third World Debt - Pakistan
Company of the Daughters of Charity of St. Vincent de Paul, USA
Debt and Development Coalition Ireland
Erlassjahr (Jubilee Germany)
Foreign Policy in Focus, USA
Forum Syd, Sweden
Gender Action, USA
Health GAP (Global Access Project), USA
Institute for Policy Studies, Global Economy Project, USA
Global Call to Action Against Poverty (GCAP), Liberia
Global South Initiative, Nepal
IBIS - Education for Development, Denmark
Jubilee Debt Campaign, UK
Jubilee Netherlands
Jubilee Scotland
Jubilee USA Network, USA
Just Foreign Policy, USA
Leadership Conference of Women Religious, USA
Make Poverty History Canada
Maryknoll Office for Global Concerns, USA
Missionary Oblates of Mary Immaculate Justice, Peace, and Integrity of Creation, USA
National Justice and Peace Network, UK
Nederlands Platform Millenniumdoelen (Dutch Platform Millennium Development Goals)
New Rules for Global Finance, USA
Nicaragua Network, USA
PRESS - Save the Children Youth Norway
Red Youth Norway
Save the Children UK
Share The World’s Resources, UK
SPEAK Network, UK
The Norwegian Coalition for Debt Cancellation (SLUG)
Treatment Action Group, USA
United Methodist Women, USA
The World Development Movement, UK
World Vision France

Link to PDF version (includes German, French, and Spanish translations)

TAKE ACTION: Sign Jubilee USA's petition