Debt, the IMF, and the World Bank

Sixty Questions, Sixty Answers

By Eric Toussaint and Damien Millet

Translated by Judith Abdel Gadir, Elizabeth Anne, Vicki Briault,
Judith Harris, Brian Hunt, Christine Pagnoulle and Diren Valayden,
with the collaboration of Francesca Denley, Virginie de Romanet
and Stephanie Jacquemont

MONTHLY REVIEW PRESS

New York

Contents

1.

2.

Abbreviations
Introduction

10
11

HUMAN RIGHTS, DEVELOPMENT, AND DEBT

1.
What is meant by "developing countries"?
2.
Why is the term "development" ambiguous?
3.
What is the link between debt and poverty?
4.
What are the "Millennium Development Goals" (MDG)? . . .
5.
What are the different kinds of debt
for developing countries?

13
15
19
22
27
44

THE ORIGIN OF THE DEBT IN DEVELOPING COUNTRIES 47

6.
What part did private banks play in die
development of developing countries'
external debts in the 1960s & 1970s?
49
7.
What part did the World Bank play in the
development of the developing countries' .
external debts in the 1960s and 1970s?
51
8.
How does the World Bank function?
54
9.
What part did the governments of countries
of the North play in the evolution of the developing
countries' external debt in the 1960s and 1970s?
61
10. How was the borrowed money used in the
developing countries?
63

3.

4.

THE DEBT CRISIS

11.
How did the price of commodities evolve during
die last quarter of the twentieth century?
12. What role did the evolution of interest rates play
in the 1982 debt crisis?
13. Are die World Bank, the IMF, and private banks
somehow responsible for the debt crisis?
14. How did creditors respond to die debt crisis?
15. Are there any similarities widi the 2007 subprime crisis? . . .

75

THE
AND
16.
17.

93
95

18.
19.

5.

6.

IMF, THE WORLD BANK,

THE LOGIC OF STRUCTURAL ADJUSTMENT
How does the IMF function?
What are the short-term or shock measures imposed by
structural adjustment, and what are their consequences?. . .
What are the long-term or structural measures imposed by
structural adjustment, and what are their consequences?. . .
What is the impact of the IMF/World Bank logic
on die world food crisis of 2007?

OTHER INTERNATIONAL PLAYERS:

THE PARIS CLUB AND THE WTO
20. What is the Paris Club?
21. Are all the developing countries treated in
die same way by the Paris Club?
22. What is undermining the Paris Club?
23. What is the role of the World Trade Organization (WTO)?.
THE STRUCTURE OF DEVELOPING COUNTRIES' DEBT . .
24. Of what does die external debt of
developing countries consist?
25.
How has the debt changed since 1970?
26. Do developing countries repay debts?
27. What about die external public debt of
developing countries?
28.
How are die debt-related financial flows directed?
29. What about die domestic debt of developing countries? . . .

71
73

79
82
88

106
109
119

125
127
131
135
138
143
145
150
152
155
161
164

7.

DECIPHERING THE OFFICIAL DISCOURSE

ON DEBT RELIEF
30. How did the debt relief initiative come about?
31. What is die Heavily Indebted Poor Countries
(HIPC) initiative?
32. Has the HIPC initiative achieved its goal?
33. What was contained in the latest debt relief

announced by the G 8 in 2005?

171
173
175
178

188

8.

THE SHAM OF THE DOMINANT MODEL . . . . . . - .

195
34. Does Official Development Assistance (ODA)
help to mitigate the effects of the debt?
197
35. Is micro-credit a solution to die excessive debt
of developing countries?
204
36. Have the policies promoted by die World Bank and
the IMF contributed to the fight against climate change?. . . 206
37. Whatis NEPAD?
211

9.

DEBT CANCELLATIONS AND SUSPENSIONS

OF PAYMENT IN THE PAST
38. Is it impossible to cancel debt?
39. Why do the governments of die South
continue to repay the debt?
40. What are vulture funds?

10. THE CASE FOR CANCELING THE DEBT

OF DEVELOPING COUNTRIES
41. What are the moral arguments in favor of canceling
die debt of developing countries?
42. What are die political arguments in favor of canceling
the debt of developing countries?
43. What are die economic arguments in favor of canceling
the debt of developing countries?
44. What are the legal arguments in favor of canceling
the debt of developing countries?
45. What are die environmental arguments in favor of
canceling die debt of developing countries?

215
217
228
230

237
239
241
244
246
254

46.
47.
48.
49.

What are die religious arguments in favor of canceling

the debt of developing countries?
Who owes what to whom?
Who has the right to impose conditions
on debt cancellation?
Can the development of emerging countries
be ensured simply by repudiating their debt?

11. ISSUES RAISED BY CANCELING THE DEBT

OF THE DEVELOPING COUNTRIES
,
50. Would canceling the debt of developing countries
cause a global financial crisis ?
51. If developing countries' debts were canceled,
would the citizens of die Nordi end up paying the bill?. . . .
52. Will canceling the debt help reinforce
existing dictatorial regimes?
53. Should borrowing be avoided at all cost?
12. CONSTRUCTING RADICAL ALTERNATIVES
54. What are the alternatives for human development in
the developing countries?
55. If and when the debt is canceled, how can a new round
of indebtedness be avoided?
56. What is debt auditing?
57. Are China, sovereign funds, or the Bank
of the Soudi valid alternatives?
58. Can die developing countries' external public debt
be compared to the public debt of the North?
13. INTERNATIONAL CAMPAIGN FOR
DEBT CANCELLATION
59. How did die international campaign
for debt cancellation start?
60. What is CADTM and how was it born?
Appendix 1: The 145 Developing Countries in 2008
Appendix 2: Glossary
Notes

257
261
262
264

267
269
273
276
281
285
287
302
304
307
315

319
321
324
329
333
347