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The International Monetary Fund (IMF) board will meet this week [6 April] to discuss how to use the extra $2.8 billion windfall it made from selling 403.3 tons of gold late last year.
Fifty-eight leading global civil society networks – including ActionAid International, Oxfam International, ONE, the International Trade Union Confederation, and global Jubilee networks – are calling for the windfall profits to be used to cancel the debts of poor countries facing crises outside their control.
The $2.8bn 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 from IMF lending to countries in crisis, including Ireland.
The Fund’s board will consider three options for the $2.8 billion gold windfall:
- absorb it into an endowment for ongoing operating expenses such as building refurbishment;
- add it to precautionary reserves for potential future use; or
- use it to assist low-income countries recovering from multiple crises.
Melinda St. Louis, Jubilee USA’s Deputy Director, said: “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 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 said: “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 said: “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.
Notes to editors
- When the IMF board agreed to sell 403.3 tons 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.
- Download: The common position statement by 58 civil society organizations
Melinda St. Louis, Jubilee USA, + 1 202-783-0215 / +1 202-441-7579 / Melinda@jubileeusa.org
Neil Watkins, ActionAid + 1 202-421-1023 / firstname.lastname@example.org