ESCR-Net Member Statement of Demands to the IMF 2021 Spring Meetings

Publish Date: 
Tuesday, March 30, 2021


The world is facing one of its most daunting challenges - a pandemic that has intensified social, political, economic and environmental crises in almost every context, increasing inequality, facilitating continued inaction on climate change, and imperiling human rights globally. The Covid-19 pandemic has particularly highlighted and aggravated long-evolving failures of our public health, social and economic systems, requiring a deep rethinking of the practices and conditionalities of the IMF, which have frequently contributed to these failures.

The IMF has consistently imposed neoliberal policy reforms amid debt crises rooted in global inequalities and colonial legacies. These structural reforms have weakened labor rights and social protections, led to the privatization and commodification of basic necessities, undermined food sovereignty, promoted regressive taxation, and imposed austerity on the majority, leading to impoverishment, dispossession and growing inequalities, including for women who face disproportionate burdens of care and are heavily represented in informal and precarious work sectors, along with many communities.

In Ecuador, the IMF imposed drastic austerity measures[1] as conditions for bailouts. Attached to a loan of $4.2 billion, the IMF and the government of Ecuador introduced severe budget cuts, salary reductions and sell-offs in exchange for bail-out funds to the government. As poverty and unemployment ravaged the country, the advent of Covid-19 further exacerbated the situation killing thousands of people and ending millions of livelihoods. The tragic outcomes of Covid-19 directly follow the austerity reforms attached to the IMF loan. For example, the IMF bailout resulted in the dismissal of 3,680 public health workers impacting healthcare provision. Despite these known impacts, the IMF continued with long-term austerity recommendations in its approach to emergency Covid-19 financing in Ecuador.

In the case of Lebanon, negotiations are ongoing with austerity measures being presented as conditionalities for the loan. Should the IMF apply austerity measures in Lebanon, based on fiscal consolidation, it would inflict more harm rather than improvement, specifically to the most vulnerable. According to a study conducted by Oxfam, 10% of the population owns around 70.6% of the country’s wealth[2]. Thus, any implementation of these types of measures will only widen the already inflated gap. This “bailout” method overlooks long term prosperity, gender equality and increases overall poverty, and increases the cost of living[3]. This will lead not only to a further deterioration of human rights the country has ever witnessed, but also the inability to acquire basic human needs like food and housing.

At the advent of the pandemic, ESCR-Net members collectively developed a Global Call to Action articulating a series of demands for a just, equitable and sustainable recovery process that centers human rights and focuses on transforming unjust economic and social structures, policies and institutions, including via debt cancelation and progressive globally coordinated tax policies. Several members also signed a public letter to the IMF rejecting any proposals to promote austerity post-pandemic and advised the IMF to instead advocate for policies that advance gender justice, reduce inequality, and decisively put people and planet first.

As human rights organizations from every region of the world,[4] representing and allied with communities impacted by and resisting the intersecting crises outlined above, we call on the IMF to:

Cancel and restructure debt for low and middle income countries

  • Stop promoting fiscal consolidation, particularly imposed spending cuts, for countries that already suffer from acutely low levels of spending. A recent Oxfam study shows that 84% of IMF Covid-19 loans push for austerity that might affect health and social protection spending (OXFAM, 2020[5]). This is generally imposed on poorer countries while wealthier countries are allowed to navigate the crisis through the significant expansion of their monetary and fiscal policy.
  • Cancel the $3.77 billion (or $10 million a day) in debt owed to the IMF this year by 73 of the world’s poorest countries, of which the vast majority spend more on debt repayment than on healthcare. This amount will provide significant relief to the indebted countries, but is relatively small on an IMF scale of operation. For the sake of perspective, the IMF has pledged $160 billion in emergency funding centered on healthcare and social protection.
  • Adopt the comprehensive debt relief package proposed by UNCTAD.[6]
  • Advocate that all governments include Collective Action Clauses (CAC) in all their bond contracts, in order to help countries ease debt burdens in difficult times. IMF researchers have encouraged countries to include CAC into their bond contracts. These clauses allow a supermajority of bondholders to agree to a debt restructuring that is legally binding on all holders of the bond, including those who vote against the restructuring. This could allow countries to halt debt repayments in cases of economic crises and catastrophes. International Financial Institutions must allow countries to call - unilaterally or collectively - for debt repayment suspensions, if they need a fiscal space to finance recovery plans from the pandemic.

Prioritize human rights and social protection in plans and programmes

  • Ensure all financing, safeguards, and guidance provided to countries give primacy to human rights obligations and environmental protections and promote a just and equitable transition towards a zero-carbon and a caring economy[7]. This includes gender responsive human rights impact assessments of the impact of fiscal policy reform on gender and economic inequality and a rejection of those with negative social impacts.
  • Implement counter-cyclical economic policies that go beyond the sole purpose of debt reduction and fiscal consolidation, and instead focus on redistribution and establishing a fundamental social protection system.
  • Put in place mechanisms to work with civil society and other domestic non-governmental stakeholders that provide health care and social services, particularly in contexts where conflict and repressive governments have directly attacked and/or undermined community resources to safeguard livelihood security and public health.
  • Reassess efficacy of loans to ensure they safeguard the rights of communities and their environment, and protect civic space.
  • Incorporate stronger social protection measures in the ‘prior actions’ of the IMF programmes. Despite including more mentions of inclusive growth and social protection in its programmes, the IMF still requires sweeping austerity measures as ‘prior actions’ that must be implemented before the Board can approve of its programmes, while social protection spending is treated as a ‘structural benchmark’ that is significantly less binding.
  • Closely monitor private sector and public projects to ensure respect for human rights, labor and environmental standards, and make clear that retaliation or discrimination for freedom of assembly, association, or political views will not be tolerated.
  • Assess the involvement of business enterprises in IMF projects through Public-Private Partnerships should be assessed on a systemic level beyond the specific projects in question to include global activities and ensure compliance with human rights.
  • Develop an enhanced due diligence process for business enterprises engaging with the government to ensure that they are not contributing to the perpetuation of situations of conflict, including situations of occupation.

Avoid policies that deepen impoverishment and inequality

  • Refrain from exercising pressure on lower and middle-income countries to depreciate their currencies. As pressures mount on local currencies versus the dollar, there is a need in lower and middle-income countries to manage their exchange rates in order to save the living standards of the majority of their populations. Devaluation is the driving force for the rising poverty and hunger. It also forges further inequalities between the minority of globalised “dollar haves” and the majority of “the dollar have-nots”. Instead of imposing devaluation as a prior action, a debt relief package would reduce pressures on exchange rates.
  • Legitimize capital controls and reassess policies under Article IV. In Lebanon, for instance, this should include reversing the imposition of substantial foreign reserve requirements and interest rate increases, accompanied by legal audit control of BDL, as well as implementing capital control measures on the rest of the commercial banks.
  • Measures adopted by the IMF should be put in practice so that the load of austerity would fall on the shoulders of the wealthy people, rather than negatively affecting those who already live in poverty. Specifically, tax measures should be implemented progressively, rather than enforced in a way that would aggravate inequality. Also, any cuts in subsidies should be accompanied by an extensive reform plan that ensures an adequate standard of living.

Model democratic and responsive governance and engagement structures

  • Model and support democratic governance, transparency and participation, including more effective engagement with impacted communities and associated civil society organizations (CSOs) including taking part in systematic dialogue between parties to IMF-supported programmes.
  • In States where there has been a recent, forceful seizure of power, such as Myanmar or Mali, immediately halt lending obligations, suspend disbursements, pending grants and loans across all sovereign and non-sovereign operations, until conclusive confirmation that these do not legitimize military rule.

[4] The International Network for Economic, Social and Cultural Rights (ESCR-Net) connects over 280 NGOs, social movements and advocates across more than 75 countries to build a global movement to make human rights and social justice a reality for all. This statement was developed via discussions of ESCR-Net’s Economic Policy Working Group, with much thanks to the following members who led in drafting, including; the Phenix Center, Arab NGO Network for Development, ALTSEAN-Burma, Egypt Initiative for Personal Rights, Al Haq, International Women’s Rights Action Watch -Asia Pacific, Osama Diab, an Individual member and the Centro de Estudios Legales y Sociales (CELS).

[6] “In the face of a looming financial tsunami this year, UNCTAD proposes a four-pronged strategy that could begin to translate expressions of international solidarity into concrete action:

1. First, a $1 trillion liquidity injection; a kind of helicopter money drop for those being left behind through reallocating existing special drawing rights at the International Monetary Fund and adding a new allocation that will need to go considerably beyond the 2009 allocation made in response to the global financial crisis.

2. Second, a debt jubilee for distressed economies. An immediate debt standstill on sovereign debt payments should be followed by significant debt relief. A benchmark could be the German debt relief administered after World War II, which cancelled half of its outstanding debt. On that measure, around $1 trillion should be cancelled this year overseen by an independently created body.

3. Third, a Marshall Plan for a healthy recovery funded from some of the missing official development assistance (ODA) long-promised but not delivered by development partners. UNCTAD estimates that an additional $500 billion – a quarter of the last decade’s missing ODA – largely in the form of grants should be earmarked for emergency health services and related social relief programmes.

4. Finally, capital controls should be given their legitimate place in any policy regime to curtail the surge in capital outflows, to reduce illiquidity driven by sell-offs in developing country markets and to arrest declines in currency and asset prices.” See: UNCTAD. 2020. “UN calls for $2.5 trillion coronavirus crisis package for developing countries.” UN calls for $2.5 trillion coronavirus crisis package for developing countries.