The organizations released a statement in which they considered the surcharges as “opaque and punitive rates” imposed on countries with high levels of debt to the IMF, and recalled that they have been widely denounced by prominent economists and legislators as “counterproductive and unfair.”
Since the pandemic began, the number of countries paying surcharges has increased from nine to 16. According to IMF projections, that number is expected to rise to 38 in the next three years.
What does the letter addressed to the G7 say?
Developing economies are currently facing what the United Nations has described as a “perfect storm”: the COVID-19 pandemic, a looming global debt crisis, and now rising prices for food, fertilizer and energy as a result of the war in Ukraine.
This crisis threatens “throw 1.7 billion people — more than a fifth of humanity — into poverty, destitution and hunger on a scale not seen in decades”According to the UN Secretary General, Antonio Guterres.
Meanwhile, overcharging diverts valuable resources that could otherwise be used to respond to the COVID-19 pandemic, strengthen food security, or invest in economic recovery.
For example, between 2019 and 2024, Egypt will pay in surcharges more than three times the cost of a full course of vaccinations for the entire country.
From 2021 to 2023, as it struggles to survive the Russian invasion, Ukraine is expected to pay more than $400 million in surcharges—about a quarter of all its fiscal effort in the health sector during the pandemic.
Support for the proposal
Ahead of this year’s IMF and World Bank spring meetings, More than 150 organizations from 65 countries called on the IMF to “align the institution with its mandate by supporting the complete elimination of surcharges.” The IMF has refused to respond to this request.
According to the Nobel Prize Joseph Stiglitzflight attendants go “exactly against what they’re supposed to [el FMI] must be doing.”
The UN Independent Expert on external debt and human rights, John Paul Bohoslavskybelieves that IMF surcharges violate international human rights and other international laws.
A report by the UN Global Crisis Response Group on Food, Energy and Finance recommends that “IMF interest rate surcharges should be suspended for at least two years.”
The signatory entities of the document are Arab Watch Coalition, Bretton Woods Project, Center for Economic and Policy Research (CEPR), erlassjahr.de – Entwicklung braucht Entschuldung (Jubilee Germany), European Network on Debt and Development (Eurodad), Red Latinoamericana por Justicia Economic and Social (LATINDADD), Institute of Analysis and Advocacy (IAA), Ukraine Center for Economic Strategy, Ukraine.
Source: Ambito
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