Congress Should Demand IMF Policy Reform Before Approving Gold Sales, Coalition Says

Press Release
Common Dreams
Apr 8, 2008

WASHINGTON, DC - April 8 -The IMF has announced a plan for a new income model for the Fund, which would involve sale of some of its gold holdings. Funds from gold sales will be invested, with proceeds used to support the IMF's operations.

The U.S. Executive Director to the IMF cannot vote in favor of gold sales without prior approval from the U.S. Congress. Eighty U.S. civil society organizations have written to Congress, urging that "Congress insist on meaningful reforms in IMF policy in developing countries and attach conditions to how gold sales will occur."

Signers of the letter include: Action Aid International USA, the AFL-CIO, Africa Action, the Bank Information Center, Essential Action, 50 Years is Enough, Global AIDS Alliance, Health GAP, Jubilee USA Network, the ONE Campaign, Oxfam America, RESULTS USA, Service Employees International Union (SEIU), and the Student Global AIDS Campaign.

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. In particular, the organizations highlight recent alarming findings by the IMF's Independent Evaluation Office that as much as 74% of aid to sub-Saharan African countries between 1999-2005 has been diverted from its intended purposes and allocated to domestic debt payment and international currency reserves, because of IMF macroeconomic and monetary policies.

The letter explains that the IMF's "overly restrictive deficit-reduction and inflation-reduction targets" prevent "developing countries from growing their economies and expanding public spending, including in the critical areas of health and education." It also notes that IMF-imposed "budget and wage bill ceilings can 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."

Before approving gold sales, the letter urges, Congress should demand changes in harmful IMF policies. Specifically, the letter calls on Congress to ensure that:

  • IMF rescinds the use of overly restrictive deficit-reduction and inflation-reduction targets;
  • Expanded health and education spending in developing countries is exempt 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; and
  • Transparency and the right to access information be strengthened at the IMF.

The letter also urges that "if gold sales are to be approved, a significant portion of the proceeds should therefore be devoted to the public good of alleviating global poverty."