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Letter Addresses IMF Policies that Undermine Development in Africa

Thursday, October 4, 2007(Washington, DC) – This week 125 civil society organizations sent a letter to Dominique Strauss-Khan, the incoming International Monetary Fund (IMF) Managing Director, calling on him to address IMF policies that undermine developing nations’ ability to increase health and education spending. The former French Finance Minister was selected to head the IMF starting November 1. In his opening press conference Monday, he committed to institutional reform. Africa Action spearheaded this civil society response that outlines some key elements of the necessary reform in collaboration with several other non-governmental organizations including ActionAid International USA, Essential Action, Health GAP, RESULTS, and the Student Global AIDS Campaign among others. The letter is now available here. (pdf)

The letter addresses an IMF Independent Evaluation Office (IEO) report that finds as much as 74% of additional foreign aid to 29 countries in sub-Saharan Africa between 1999-2005 has been diverted from its intended purposes and allocated to domestic debt payment and international currency reserves because of IMF policies regulating macroeconomic and monetary policies.

Marie Clarke Brill, Interim Executive Director of Africa Action said this morning, “In light of the devastation of the HIV/AIDS pandemic and global efforts to achieve universal access to treatment by 2010, it is unconscionable that IMF policies force governments to siphon desperately needed additional aid flows away from health ministries in order to meet the IMF’s overly conservative inflation targets. If Mr. Strauss-Khan is serious about IMF reform, these issues must be at the top of his agenda.”

The letter calls for four key changes in policy, including removing obstacles to increased spending on health, HIV/AIDS and education, thereby enabling policy makers in borrowing countries; exploring and adopting more expansive fiscal and monetary policy options; providing immediate debt cancellation; and addressing budget and wage bill ceilings that undermine 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.

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