On commission from the Debt and Development Coalition Ireland, Jubilee Research has produced a comprehensive report on whether the IMF and the World Bank have the resources to cancel poor country debts.
This report systematically demonstrates that both the World Bank and the IMF have abundant resources to cancel 100% of the debt owed to them by the Highly Indebted Poor Countries (HIPCs).
The World Bank and IMF have both dismissed exhortations by civil society to cancel these debts as 'unaffordable'. They went on record to say that any potential debt cancellation would have to come at the cost of other developing countries in the form of reduced assistance and higher borrowing costs. Furthermore, they say that such an exercise would seriously jeopardize their operations and impair their financial soundness.
However, using sound financial techniques, this report shows that such claims are completely baseless and inaccurate. It proves that both the institutions can muster sufficient additional internal resources without adverse impact on either other developing countries or their own financial situation.
More specifically, the report demonstrates how the IMF can mobilize its abundant gold reserves for the purpose of debt cancellation without negatively impacting gold producing developing countries. It also illustrates how not mobilizing these gold reserves has a very high opportunity cost for the borrowing countries and, contrary to what the IMF claims, is both financially inefficient and imprudent.
For the World Bank too, the report shows that the IBRD has sufficient resources to cancel all HIPC debts outstanding to the World Bank. It demonstrates how this can easily be done without endangering the IBRD's much-touted AAA credit rating or increasing its borrowing costs.
Last but not least, the report methodically rebuts all the arguments against 100% debt cancellation that the IMF and the World Bank have listed in a joint paper1.
To go to the Report click here:
http://www.jubileeresearch.org/analysis/reports/jubilee_canceldebt.pdf
1 100 Percent Debt Cancellation? A Response from the IMF and the World Bank
By IMF and World Bank Staffs July 2001 http://www.imf.org/external/np/exr/ib/2001/071001.htm
Jubilee Research: http://www.jubileeresearch.org
This report systematically demonstrates that both the World Bank and the IMF have abundant resources to cancel 100% of the debt owed to them by the Highly Indebted Poor Countries (HIPCs).
The World Bank and IMF have both dismissed exhortations by civil society to cancel these debts as 'unaffordable'. They went on record to say that any potential debt cancellation would have to come at the cost of other developing countries in the form of reduced assistance and higher borrowing costs. Furthermore, they say that such an exercise would seriously jeopardize their operations and impair their financial soundness.
However, using sound financial techniques, this report shows that such claims are completely baseless and inaccurate. It proves that both the institutions can muster sufficient additional internal resources without adverse impact on either other developing countries or their own financial situation.
More specifically, the report demonstrates how the IMF can mobilize its abundant gold reserves for the purpose of debt cancellation without negatively impacting gold producing developing countries. It also illustrates how not mobilizing these gold reserves has a very high opportunity cost for the borrowing countries and, contrary to what the IMF claims, is both financially inefficient and imprudent.
For the World Bank too, the report shows that the IBRD has sufficient resources to cancel all HIPC debts outstanding to the World Bank. It demonstrates how this can easily be done without endangering the IBRD's much-touted AAA credit rating or increasing its borrowing costs.
Last but not least, the report methodically rebuts all the arguments against 100% debt cancellation that the IMF and the World Bank have listed in a joint paper1.
To go to the Report click here:
http://www.jubileeresearch.org/analysis/reports/jubilee_canceldebt.pdf
1 100 Percent Debt Cancellation? A Response from the IMF and the World Bank
By IMF and World Bank Staffs July 2001 http://www.imf.org/external/np/exr/ib/2001/071001.htm
Jubilee Research: http://www.jubileeresearch.org