By Danielle Kurtzleben (IPS)
A broad coalition of civil society groups, as well as some U.S. lawmakers, is fighting what they call a "blank cheque" from the U.S. to expand funding for the International Monetary Fund (IMF).
On May 22, the Senate passed a 91.3 billion-dollar-wartime spending bill that included 108 billion dollars for the Washington-based Fund. The bill will now have to be reconciled in a conference committee between the Senate and the House of Representatives whose own version omitted any IMF funding.
The funding was the U.S. part of a larger package agreed by the G20 leaders at their April meeting in London, where they pledged to provide 1.1 trillion dollars in additional funding to the IMF.
The goal is to boost lending to cash-strapped developing countries during the current economic crisis, which has drastically reduced the flow of private investment to emerging markets and the earnings of many poor countries that depend on their commodity exports.
Opponents of the funding are concerned about the conditions the IMF usually imposes upon low-income countries when they accept these funds, conditions which, according to many NGOs, actually do more harm than good, particularly for the most vulnerable sectors of the recipients' populations.
Typically, the IMF requires recipient countries to reduce their budget deficits and increase interest rates, both of which can produce the opposite effect of the economic stimulus the funds are meant to provide. As a result, countries have been forced to cut essential social programmes, like unemployment insurance and other safety-net mechanisms.
"It makes no sense to provide money intended to support global stimulus spending to the IMF when the IMF is demanding developing countries employ recessionary policies," says Robert Weissman, director of Essential Action, a non-profit organisation that advocates, among other things, change in what it considers to be harmful IMF and World Bank practices.
"The point of giving these crisis loans is to help countries avert those kind of contractionary policies, not to demand them as a condition on the loans," according to Weissman. "So the conditionality undermines the logical purposes of giving the loans."
Mark Weisbrot, co-director of the Centre for Economic and Policy Research (CEPR), also notes that U.S. lawmakers may not understand the broader implications of IMF policy. "A lot of them are looking at it in straight power terms. They're not looking at it as 'Does the IMF do good or harm?' but rather, 'This is a potentially powerful organisation.'"
Still, there is a push in Congress to amend the bill so that the requested funds can be used to ensure that more vulnerable groups in low-income countries will benefit. Rep. Maxine Waters of California has circulated a letter opposing the funding and currently has over 33 signatures from fellow House members. ...
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