Category Archives: IMF

Fossil fuels subsidised by $10m a minute, says IMF

Damian Carrington reports for The Guardian:

Fossil fuel companies are benefitting from global subsidies of $5.3tn (£3.4tn) a year, equivalent to $10m a minute every day, according to a startling new estimate by the International Monetary Fund.

The IMF calls the revelation “shocking” and says the figure is an “extremely robust” estimate of the true cost of fossil fuels. The $5.3tn subsidy estimated for 2015 is greater than the total health spending of all the world’s governments.

The vast sum is largely due to polluters not paying the costs imposed on governments by the burning of coal, oil and gas. These include the harm caused to local populations by air pollution as well as to people across the globe affected by the floods, droughts and storms being driven by climate change.’

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Want to Help Nepal Recover from the Quake? Cancel its Debt, Says Rights Group

Kanya D’Almeida writes for IPS News:

[…] Questions abound as to how this impoverished nation, ranked 145 out of 187 on the United Nations Human Development Index (HDI) – making it one of the world’s Least Developed Countries (LDCs) – will recover from the disaster, considered the worst in Nepal in over 80 years.

One possible solution has come from the Jubilee USA Network, an alliance of over 75 U.S.-based organisations and 400 faith communities worldwide, which said in a press release Monday that Nepal could qualify for debt relief under the International Monetary Fund’s (IMF) new Catastrophe Containment and Relief Trust (CCR).

The IMF created the CCR this past February in order to assist poor countries recover from severe natural disasters or health crises by providing grants for debt service relief. Already, the fund has eased some of the financial woes of Ebola-impacted countries by agreeing to cancel nearly 100 million dollars of debt.

Quoting World Bank figures, Jubilee USA said in a statement, “Nepal owes 3.8 billion dollars in debt to foreign lenders and spent 217 million dollars repaying debt in 2013.”

Nepal owes some 1.5 billion dollars each to the World Bank and the Asian Development Bank, as well as 54 million dollars to the IMF, 133 million dollars to Japan and 101 million dollars to China.’

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The austerity delusion: The case for cuts was a lie. Why does Britain still believe it?

Paul Krugman writes for The Guardian:

[…] It is rare, in the history of economic thought, for debates to get resolved this decisively. The austerian ideology that dominated elite discourse five years ago has collapsed, to the point where hardly anyone still believes it. Hardly anyone, that is, except the coalition that still rules Britain – and most of the British media.

I don’t know how many Britons realise the extent to which their economic debate has diverged from the rest of the western world – the extent to which the UK seems stuck on obsessions that have been mainly laughed out of the discourse elsewhere. George Osborne and David Cameron boast that their policies saved Britain from a Greek-style crisis of soaring interest rates, apparently oblivious to the fact that interest rates are at historic lows all across the western world. The press seizes on Ed Miliband’s failure to mention the budget deficit in a speech as a huge gaffe, a supposed revelation of irresponsibility; meanwhile, Hillary Clinton is talking, seriously, not about budget deficits but about the “fun deficit” facing America’s children.

Is there some good reason why deficit obsession should still rule in Britain, even as it fades away everywhere else? No. This country is not different. The economics of austerity are the same – and the intellectual case as bankrupt – in Britain as everywhere else.’

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China-US Rivalry Front and Center of IMF Reform Debate

UK shift to China and AIIB “extremely worrying for Washington” – Interview with Liam Halligan

‘Liam Halligan, editor at large of Business New Europe and Telegraph columnist, talks to Going Underground host Afshin Rattansi about the Asian Infrastructure Investment Bank. He explains it is a rival to not only the IMF but also to the Asia Development Bank, which is Japanese-led. This is extremely threatening to the US as the BRIC countries wield a massive amount of power. There is a difference in the way that America and Britain see China, with the UK seeing them as a trading partner rather than a challenge. It is a symbolic move for Britain to back the AIIB, taking a step away from Washington towards a current that the US sees as a ‘major irritant.’ And he feels there is a growing argument that Britain’s future lies not in the West, with a failing Eurozone, but in a thriving Asian economy.’ (Going Underground)

IMF: Ukraine to get $40 billion bailout

DW reports:

The International Monetary Fund (IMF) and embattled Ukraine have reached an initial deal on a new financial rescue package worth $17.5 billion, a potential “turning point” for Kyiv, IMF chief Christine Lagarde confirmed on Thursday.

The IMF’s contribution is part of a total of $40 billion Ukraine is set to receive from the international community.

Talks on the country’s fourth bailout in 10 years had been underway in the Ukrainian capital for days after the last aid program from April 2014 failed to stabilize Ukraine’s finances as it battles pro-Russian separatists in the east.’

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Former IMF Chief Dominique Strauss-Kahn To Face Trial On Pimping Charges

Bilderberg and the Cult of Austerity

Andrew Gavin Marshall writes in the sixth part in his series on Bilderberg:

AusterityLeedsTxistockphotoE3x4-1‘It could almost be a slogan: Bilderberg brings people together. Specifically, every year, the Bilderberg Group holds secret, “private” meetings at four star hotels around the world, bringing together nearly 150 of the world’s most influential bankers, corporate executives, dynasties, heads-of-state, foreign policy strategists, central bankers and finance ministers. It also invites the heads of international organizations, think tanks, foundations, universities, military and intelligence officials, media barons, journalists and academics.

Participants at Bilderberg appreciate having a closed-door forum where they can speak openly and directly to one other – and of course, not to us. But perhaps we, the people, would also like to hear what they have to say. For the past four years, Bilderbergers have been running around the world preaching the gospel of “austerity” and “structural reform” – very important terms. If you don’t know what they mean, Bilderbergers are working their day jobs to make sure you will learn.’

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Trojan Hearse: Greek Elections and the Euro Leper Colony

Greg Palast writes:

‘Europe is stunned, and bankers aghast, that polls show the new party of the Left, Syriza, will win Greece’s parliamentary elections to be held this coming Sunday, January 25.

Syriza promises that, if elected, it will cure Greece of leprosy.

Oddly, Syriza also promises that it will remain in the leper colony.  That is, Syriza wants to rid Greece of the cruelty of austerity imposed by the European Central Bank but insists on staying in the euro zone.

The problem is, austerity run wild is merely a symptom of an illness.  The underlying disease is the euro itself.’

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What Is Causing Market Volatility? Interview with Leo Panitch

Editor’s Note: Professor Leo Panitch is a distinguished research professor of Political Science at York University in Toronto, Canada and editor of the Socialist Register. He is also co-author of ‘The Making of Global Capitalism: The Political Economy of American Empire‘.

China Steps In as World’s New Bank

William Pesek writes for Bloomberg:

Thanks to China, Christine Lagarde of the International Monetary Fund, Jim Yong Kim of the World Bank and Takehiko Nakao of the Asian Development Bank may no longer have much meaningful work to do.

Beijing’s move to bail out Russia, on top of its recent aid for Venezuela and Argentina, signals the death of the post-war Bretton Woods world. It’s also marks the beginning of the end for America’s linchpin role in the global economy and Japan’s influence in Asia.

What is China’s new Asian Infrastructure Investment Bank if not an ADB killer? If Japan, ADB’s main benefactor, won’t share the presidency with Asian peers, Beijing will just use its deep pockets to overpower it. Lagarde’s and Kim’s shops also are looking at a future in which crisis-wracked governments call Beijing before Washington. ‘

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IMF, World Bank, Giant Consultants Admit the Storm is Coming

Andrew Gavin Marshall wrote for Occupy back in July:

‘These two groups – financial institutions and the consultants that advise them – play key roles in the spread of institutionalized corporate and financial power, and as such, warnings from these groups about the threat posed by “social unrest” carry particular weight as they are geared toward a particular audience: the global oligarchy itself.

Organizations like the International Monetary Fund (IMF) and World Bank were responsible for forcing neoliberal economic “restructuring” on much of the developing world from the 1980s onwards, as the IMF and E.U. are currently imposing on Greece and large parts of Europe. The results have been and continue to be devastating for populations, while corporations and banks accumulate unprecedented wealth and power.

As IMF austerity programs spread across the globe, poverty followed, and so too did protests and rebellion. Between 1976 and 1992, there were 146 protests against IMF-sponsored programs in 39 different countries around the world, often resulting in violent state repression of the domestic populations.

These same programs by the IMF and World Bank facilitated the massive growth of slums, as the policies demanded by the organizations forced countries to undertake massive layoffs, privatization, deregulation, austerity and the liberalization of markets – amounting, ultimately, to a new system of social genocide. The new poor and displaced rural communities flocked to cities in search of work and hope for a better future, only to be herded into massive urban shantytowns and slums. Today roughly one in seven people on Earth, or over 1 billion, live in slums.’

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IMF’s Post-Crisis Austerity Call Mistaken, Internal Watchdog Says

Andrew Mayeda reports for Bloomberg:

The International Monetary Fund (IMF) logo is seen at the IMF headquarters building in Washington.‘The verdict is in on the International Monetary Fund’s call for government austerity in the aftermath of the 2008 financial crisis: bad idea.

Where the fund went awry was in its 2010 shift away from recommending government stimulus to calling for budget cuts in the biggest advanced economies, according to a report released today by the IMF’s internal watchdog, the Independent Evaluation Office. That turn was inappropriate given the global recovery’s modest pace, the report said.

The findings add credence to views of critics such as Nobel economics laureate Paul Krugman, who said in 2010 that austerity was a “terrible idea” at the time. The IMF has since shifted its position, calling on countries to step up infrastructure spending at its annual meeting last month.’

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Climate Change, Land Grabs, and Revolution in Burkina Faso

Alexander Reid Ross, author of Grabbing Back writes for CounterPunch:

Like virtually every country in Africa, Burkina Faso has been assailed by North Atlantic military intervention over the past four decades, as well as an escalation of land grabs since 2008. More land has been grabbed in Africa over the past 15 years than in the rest of the world combined—more than 55 million hectares, according to Blessing Karumbidza of the Global Justice Ecology Project. The economic tensions between local producers and international powers that have contributed to the revolutionary dissatisfaction with the establishment in Burkina Faso can be found in virtually any country subject to the harsh and cruel conditions of the global land grab and the crisis of climate change. The revolution in Burkina Faso represents a crucial break, summoning the revolutionary leaders of past generations to maintain a legacy of popular control.

The popular movement that has spread throughout the small African state contains the process of liberation both inspired by and inspiring different forms of political engagement throughout the continent. While some, including the present military junta, insist that we are seeing a youth rebellion, the revolution has formulated a deeper, systemic challenge. The promise of Thomas Sankara, the “Che Guevara of Africa” who ruled Burkina from 1983 until his assassination in 1987, was the suture of the generation gap and the progression of egalitarian economic policies. While Sankara emerged as a powerful leader in Burkina Faso in the 1970s, a powerful student movements broke through in nearby Sierra Leone, the independence movement of Guinea-Bissau ascended to power, and the People’s Republic of Benin was declared. West Africa was uniting under common dreams of liberation fueled by the legacy of Kwame Nkrumah, Sekou Toure, and other noteworthy West African leaders of the 1950s and 1960s. After the imprisonment of Nelson Mandela and the assassination of Amílcar Cabral, Sankara appeared among the most important radical leaders in all of Africa. The current revolution, with its rekindling of Sankara’s legacy, can be seen as a return to the legacy of national liberation—not just as a youth movement, but a rejection of the neoliberal trajectory set into place after Sankara’s death.’

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China launches new Asian Development Bank – seen as rival to World Bank, IMF

Christopher Bodeen reports for the Associated Press:

The Associated Press‘China and 21 other Asian nations signed on Friday to a new Beijing-backed international bank for Asia that Washington opposes as an unnecessary rival to established institutions such as the World Bank.

Representatives of the 22 nations signed a memorandum of understanding at the Great Hall of the People in the heart of Beijing to establish the Asian Infrastructure Investment Bank.

The new bank reflects both China’s desire to push investment in the region and its frustration with U.S., Japanese and European dominance of the World Bank, International Monetary Fund and Asian Development Bank.

The new lender would fund the construction of roads, railways, power plants and telecommunications networks in Asia that global finance officials say are needed to keep the region’s economies humming along.’

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IMF warns period of ultra-low interest rates poses fresh financial crisis threat

Larry Elliott reports for The Guardian:

‘A prolonged period of ultra-low interest rates poses the threat of a fresh financial crisis by encouraging excessive risk taking on global markets, the International Monetary Fund has said.

The Washington-based IMF said that more than half a decade in which official borrowing costs have been close to zero had encouraged speculation rather than the hoped-for pick up in investment.

In its half-yearly global financial stability report, it said the risks to stability no longer came from the traditional banks but from the so-called shadow banking system – institutions such as hedge funds, money market funds and investment banks that do not take deposits from the public.’

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The Whys Behind the Ukraine Crisis

Robert Parry writes for Consortium News:

Assistant Secretary of State for European Affairs Victoria Nuland, speaking to Ukrainian and other business leaders at the National Press Club in Washington on Dec. 13, 2013, at a meeting sponsored by Chevron.‘A senior U.S. diplomat told me recently that if Russia were to occupy all of Ukraine and even neighboring Belarus that there would be zero impact on U.S. national interests. The diplomat wasn’t advocating that, of course, but was noting the curious reality that Official Washington’s current war hysteria over Ukraine doesn’t connect to genuine security concerns.

So why has so much of the Washington Establishment – from prominent government officials to all the major media pundits – devoted so much time this past year to pounding their chests over the need to confront Russia regarding Ukraine? Who is benefiting from this eminently avoidable – yet extremely dangerous – crisis? What’s driving the madness?’

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IMF head Christine Lagarde to be investigated for alleged role in political fraud case

Anne Penketh reports for The Guardian:

File:Lagarde.jpg‘The head of the International Monetary Fund, Christine Lagarde, has been charged with “simple negligence” over her handling of a controversial €400m payout to French business tycoon Bernard Tapie when she was finance minister. Lagarde announced that she had been placed under investigation by a magistrate on Tuesday – the French equivalent of being charged in the UK – after being questioned for 15 hours at the court of justice in Paris, which deals with cases of alleged ministerial wrongdoing.

But she told a reporter that she would not resign from her position: “I’m going back to work in Washington this afternoon,” she said. The IMF chief insisted that she had not broken the law and would appeal. The case is an embarrassment for Lagarde, the IMF and France. Judicial sources told the Guardian that negligence by a government official carried a possible one-year prison term and/or a €15,000 (£11,900) fine.’

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Argentina Sues U.S. In World Court To Stop Vulture Fund Billionaire: Interview with Greg Palast

‘Greg Palast: President Obama has failed to exercise his authority to stop a New York judge from ordering Argentina to pay vulture fund billionaire Paul Singer debt worth pennies on the dollar’ (The Real News)

How World Bank & IMF Plan to “Dismantle” Ukrainian Economy: Interview with Michael Hudson

Ghana to seek help from IMF after currency falls 40%

From BBC News:

‘Ghana has said it will seek financial aid from the International Monetary Fund (IMF) to help strengthen the West African nation’s currency. The cedi has fallen 40% against the US dollar this year, making it one of the world’s worst-performing currencies. Ghana, once seen as a shining example of economic strength in the region, is also struggling with high inflation.

The country last went to the IMF for help in 2009, when it secured a $600m (£360m), three-year aid package. Despite being a major exporter of gold, oil and cocoa, Ghana is struggling with large current account and budget deficits. Last week, the country’s finance minister told the BBC the country would fix its currency problems itself and only go to the IMF as a last resort. Many experts see the decision to go to the IMF as the first admission by the government that the economy is in bad shape.’

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Rethinking the role of global investment in Africa’s development

Yash Tandon writes for Pambazuka News:

Africa-FDI-Western-Investment‘Much hope is placed on foreign direct investment to deliver development capital for African countries. Yet FDIs are part of the global financial capitalist system, which maintains and reproduces inequality and keeps African states dependent on Western countries and financial institutions.

Africa’s political leaders are under illusion to believe that foreign direct investments (FDIs) will get them out of their development crisis. This is not to dismiss FDIs but to provide a framework for an analytical and critical understanding of ‘capital’, how it is generated, and what its real function is.’

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Nobel Economist Joseph Stiglitz Hails New BRICS Bank Challenging U.S.-Dominated World Bank & IMF

‘A group of five countries have launched their own development bank to challenge the U.S.-dominated World Bank and International Monetary Fund. Leaders from the so-called BRICS countries — Brazil, Russia, India, China and South Africa — unveiled the New Development Bank at a summit in the Brazilian city of Fortaleza. The bank will be headquartered in Shanghai. Together, BRICS countries account for 25 percent of global GDP and 40 percent of the world’s population. To discuss this development, we are joined by Nobel Prize-winning economist Joseph Stiglitz, a professor at Columbia University and the World Bank’s former chief economist. “It’s very important in many ways,” Stiglitz says of the New Development Bank’s founding. “This is adding to the flow of money that will go to finance infrastructure, adaptation to climate change — all the needs that are so evident in the poorest countries. It [also] reflects a fundamental change in global economic and political power. The BRICS countries today are richer than the advanced countries were when the World Bank and the IMF were founded. We’re in a different world — but the old institutions haven’t kept up.”‘ (Democracy Now!)

Jim Rickards: BRICS Development Bank A Significant Step Away From The Dollar

China plans investment bank to break World Bank dominance

RT reports:

‘China is moving forward with a plan to create its own version of the World Bank, which will rival institutions that are under the sway of the US and the West. The bank will start with $100 billion in capital. The Asian Infrastructure Investment Bank (AIIB) will extend China’s financial reach and compete not only with the World Bank, but also with the Asian Development Bank, which is heavily dominated by Japan. The $100 billion in capital is double that originally proposed, the Financial Times (FT) reported.

A member of the World Bank, China has less voting power than countries like the US, Japan, and the UK. It is in the ‘Category II’ voting bloc, giving it less of a voice. In the Asian Development Bank, China only holds a 5.5 percent share, compared to America’s 15.7 percent share and Japan’s 15.6 share. At the International Monetary Fund, China pays a 4 percent quota, whereas the US pays nearly 18 percent, and therefore has more influence within the organization and where loans go. “China feels it can’t get anything done in the World Bank or the IMF so it wants to set up its own World Bank that it can control itself,” the FT quoted a source close to discussions as saying.’

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BRICS nations hope to bankroll a changing world order

Michael Pizzi writes for Al Jazeera:

‘After more than six decades of dictating development policy in much of the emerging world, the Western-led International Monetary Fund and World Bank may soon have some competition.

The BRICS nations — Brazil, Russia, India, China and South Africa — are reportedly close to finalizing their long-awaited development bank and currency reserve, each valued at $100 billion, in what has been billed as a historic challenge by the world’s emerging economies to a global financial architecture that has been dominated by the U.S. and Western Europe since its post–World War II inception.

The BRICS nations first announced their plans for the bank in March 2013 but struggled to reach an agreement over China’s desire to hold a greater stake in the institution. But a Brazilian government official told Reuters last week that the five members were ready to split funding and control equally, clearing the last major hurdle for a launch in 2016.

To economists in the developing world, who have long criticized the World Bank and IMF as anathema to the countries they purport to help, the New Development Bank holds tremendous promise. Critics say the West has taken advantage of its monopoly in international lending to wield outsize influence in the economic and political affairs of developing countries, dictating development models that further entrench these countries’ subservience to the West.

But unlike the U.S. and Europe, who are in lockstep on most things, the BRICS countries have little in common but a shared ambition to rebalance the global economic order.’

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Who’s in control – nation states or global corporations?

Gary Younge writes for The Guardian:

Greek newspapers are on display in Athen‘The night in 2002 when Luiz Inácio Lula da Silva won his landslide victory in Brazil’s presidential elections, he warned supporters: “So far, it has been easy. The hard part begins now.” He wasn’t wrong. As head of the leftwing Workers’ party he was elected on a platform of fighting poverty and redistributing wealth. A year earlier, the party had produced a document, Another Brazil is Possible, laying out its electoral programme. In a section entitled “The Necessary Rupture”, it argued: “Regarding the foreign debt, now predominantly private, it will be necessary to denounce the agreement with the IMF, in order to free the economic policy from the restrictions imposed on growth and on the defence of Brazilian commercial interests.”

But on the way to Lula’s inauguration the invisible hand of the market tore up his electoral promises and boxed the country around the ears for its reckless democratic choice. In the three months between his winning and being sworn in, the currency plummeted by 30%, $6bn in hot money left the country, and some agencies gave Brazil the highest debt-risk ratings in the world. “We are in government but not in power,” said Lula’s close aide, Dominican friar Frei Betto. “Power today is global power, the power of the big companies, the power of financial capital.”‘

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IMF Confirms $17bn Loan to Ukraine with Conditions That Will Devastate the Economy

From Scriptonite Daily:

‘Like many a nation before it, Ukraine is about to become a dependent of the IMF.  The IMF and the Ukrainian interim government  have agreed a $17bn loan over the next two years, together with a package of measure to hike up gas prices by 50%slash public spending, suspend the minimum wage and cut public sector wages. All before those pesky presidential elections at the end of May.

Ukraine’s budget deficit currently stands at 9%, it’s public debt at 41% of GDP and external debt at 79% of GDP. This isn’t great, but the US, the UK, Japan and Italy all have debts far in excess of Ukraine, exceeding 100% of GDP.

By the IMF’s own estimates, its programme of hiking up energy prices, cutting wages and depreciating the currency will result in a sharp contraction of the economy, a spike in inflation and an increase in the debt burden of the Ukraine:

In the current difficult environment, real GDP is expected to contract by about 5 percent in 2014 amid weak investor and consumer confidence. Inflation is expected to spike temporarily in response to the exchange rate depreciation and gas and heating tariff increases, reaching 16 percent at end-2014.

The currency devaluation and official borrowing (to help finance a still-wide government deficit) are expected to push public sector debt up to 57 percent of GDP and external debt to just below 100 percent of GDP.

Of course, it goes on to proclaim that in the medium term everything will right itself and things will improve.  but, it never does.  This is the same policy platform that decimated Greece, and much of the African and South American continents before it.

The game of the IMF is debt dependency, in order to asset strip the state for the benefit of Western speculators.  Ukraine is about to be torn to pieces by the vultures.’

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Serbia’s new PM pledges painful reforms with eyes on EU

Maja Zuvela and Ivana Sekularac report for Reuters:

Serbia’s parliament approved the cabinet of Prime Minister Aleksandar Vucic who took office on Sunday pledging deep economic reform and a drive to get the country into the European Union by the end of the decade. In March the 44-year-old Progressive Party (SNS) leader won the strongest popular mandate of any government since the days of Slobodan Milosevic, a leader during the wars of Yugoslavia’s demise in the 1990s that left Serbia isolated and bankrupt. One hundred and ninety-eight deputies in the 250-seat parliament voted for Vucic’s 19-member cabinet. Vucic said entry into the EU would be the government’s priority.

The former ultra-nationalist and Milosevic-era minister, who converted to the pro-EU cause in 2008, promised root-and-branch reform of the bloated public sector, pension system and labour law, as well as a cut of subsidies to loss-making state firms. His lead role in a much-publicized fight against crime and corruption, including the arrest and trial of influential Balkan retail tycoon Miroslav Miskovic, has vested him with popularity and helped him secure 158 out of 250 seats in the parliament.

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Guerrilla group says it carried out Greek central bank bombing

From Reuters:

An anarchist Greek guerrilla group has claimed responsibility for a car bombing at a central bank building in Athens two weeks ago. The dawn blast on April 10 caused no injuries but smashed windows in one of the busiest streets in the capital. It came hours before Greece tapped bond markets for the first time since its bailout began four years ago.

The Revolutionary Struggle militant group said in a document on an anti-establishment website the attack was a protest against Greece’s return to bond markets and proved the group was still active. In 2010, authorities said they had dismantled Revolutionary Struggle.

The group said the blast also targeted the office of the International Monetary Fund representative in Greece, housed in the central bank premises, and was a protest against a visit to Athens by German Chancellor Angela Merkel the next day. Revolutionary Struggle said the purpose of the attack was to awaken austerity-hit Greeks and topple the state.

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