IMF Needs Radical Reform to Halt "Failed Policies"
IMF needs radical reform to halt ‘failed policies’ of privatization and austerity – UN expert
NEW YORK (17 October 2017) – 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.
Unveiling a series of proposals for change, Mr. de Zayas said it was time for “smart” lending policies which encouraged States to honour 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 Mr. de Zayas, presenting his full report.
“The IMF currently imposes conditions which discourage social spending and therefore hinder States’ fulfilment of their human rights obligations. Often these conditions increase unemployment, lower standards governing labour, 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 specialised agencies, funds and programmes, such as the UN Conference on Trade and Development and the ILO.”
The Independent Expert urged the IMF to abandon its “outdated” insistence on “Wild West” privatization, market deregulation and austerity in social services, which he argued had failed to ensure economic stability, had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".
Instead, Mr. 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 Mr. 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.
Mr. Alfred de Zayas (United States of America) was appointed as the first Independent Expert on the promotion of a democratic and equitable international order by the Human Rights Council, effective May 2012. He is currently professor of international law at the Geneva School of Diplomacy.
The Independent Experts are part of what is known as the Special Procedures of the Human Rights Council. Special Procedures, the largest body of independent experts in the UN Human Rights system, is the general name of the Council’s independent fact-finding and monitoring mechanisms that address either specific country situations or thematic issues in all parts of the world. Special Procedures’ experts work on a voluntary basis; they are not UN staff and do not receive a salary for their work. They are independent from any government or organization and serve in their individual capacity.