World Economy

UN Expert Says: IMF, WB Looking More Like Failed Institutions

UN Expert Says: IMF, WB Looking More Like Failed InstitutionsUN Expert Says: IMF, WB Looking More Like Failed Institutions

The lending policies of the International Monetary Fund are actively undermining some of the UN’s human rights and development priorities, as well as promoting the “failed” policies of privatization and “austerity”, a UN expert has warned.

“The human rights dimension in lending can no longer be ignored,” Alfred de Zayas, independent expert on the promotion of a democratic and equitable international order, told the UN General Assembly in New York, reported.

Unveiling a series of proposals for change, de Zayas said it was time for “smart” lending policies which encouraged states to honor their human rights and development commitments, rather than hindering the process.

“I deplore the fact that the lending practices of the international financial institutions sometimes go against the aims of the United Nations, not just in the field of human rights, but also in achieving the Sustainable Development Goals,” said de Zayas, presenting his full report.

“The IMF currently imposes conditions which discourage social spending and therefore hinder states’ fulfillment of their human rights obligations. Often these conditions increase unemployment, lower standards governing labor, health and the environment, and reduce access to free quality education.

 “From this point forward, the World Bank and the IMF must work in tandem with the UN system, including with the specialized agencies, funds and programs, such as the UN Conference on Trade and Development and the ILO.”

The expert urged the IMF to abandon its “outdated” insistence on “Wild West” privatization, market deregulation and austerity in social services, which he argued had failed to ensure economic stability, had engendered human rights violations and had to be seen as “failed policies”.

 Set of Seven Conditions

Instead, de Zayas proposed an important set of seven conditions which countries should have to accept before receiving loans. These include a moratorium on military spending, except salaries and pensions, and new laws to tackle individual and corporate tax evasion and fine citizens who illicitly keep money in offshore accounts.

Taxes would also have to be imposed on financial transactions, and it would be unlawful for IMF loan money to be used to pay claims by “vulture funds”, which target situations where debt default is likely, or claims by debt restructuring mechanisms such as holdouts, which also target situations in or near default.

Countries would also have to outlaw tax havens, ensure that all corporations paid tax, ban “profit-shifting”—which sees corporations move profits on paper to the lowest tax jurisdiction—and finally pass and enforce anti-corruption laws.

“These proposals will ensure that states generate the revenue they need to pay back IMF loans, which is in the interest of creditors and currency stability,” said de Zayas.

“The current policies and practices of the World Bank and IMF have an enormous impact on the lives of millions of people, notably the most vulnerable, the young and the elderly.”

He called on the IMF to revisit its Articles of Agreement to ensure that good financial planning also promoted development and human rights.

“No international financial institution, transnational corporation or trade agreement is above international law. All must respect the overarching international human rights treaty regime. These institutions should also address the concerns of civil society, and the pragmatic recommendations of UN special rapporteurs and other independent experts on human rights,” the independent expert said.

 “Implementing these recommendations will benefit the entire human family. Only through the concerted efforts of IMF and the World Bank, together with the United Nations, will a more democratic and equitable international order emerge,” he concluded.

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