Congress Unlikely to Back Imf Gold Sale in Current Form: Part 2
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This plea, together with other notable opposition, most
recently from South African President Thabo Mbeki, has
resonated among US lawmakers and helped to galvanize
opposition to the proposal, congressional staff and
lawmakers said.
Legislation has already been introduced by New Jersey
Republican Rep. Jim Saxton--and co-sponsored by House
Majority Leader Dick Armey of Texas--to block the sale of
IMF gold unless the proceeds are returned to the nations
that contributed the gold to the IMF's reserves initially.
Opposition is bipartisan in both the House and Senate
because:
--It would hurt US gold producers and cost mining jobs;
--It would hurt poor gold-producing countries overseas
more than the debt relief would help, and
--It would provide the IMF with additional resources not
subject to extra-institutional oversight.
"I don't know of anyone who has explicitly identified
with this approach," a senior House staffer said. "While
there is a majority of lawmakers who support financing debt
relief, none of them support this particular mechanism."
The staffer conceded that "there are probably a large
number of members who are open-minded" on the issue, but he
noted that "there is some high-level opposition, and it's by
no means clear to most members that this is the best or only
means to finance IMF debt relief."
He stressed that the link between the IMF sale and its
Enhanced Structural Adjustment Facility is "quite
controversial." ESAF is the IMF's concessional lending
window, through which it makes interest-free loans to its
poorest members. It is also the mechanism the IMF would use
to fund debt relief, the procedure working as follows:
--When a country qualifies for debt relief, the IMF
would make an interest-free loan to it from ESAF;
--The country would then use that interest-free money to
make interest and principal payments on its existing stock
of IMF debt, ultimately paying it down.
--The ESAF loan would then be repayable--principal only
--over an extended maturity, giving the HIPC country in
effect zero-interest refinancing of its IMF debt.
However, to qualify for an ESAF loan, an HIPC country
must meet IMF conditions, which include economic and
structural reforms that many lawmakers believe hit the
poorest disproportionately hard. Rep. Frank told Bridge News
that "I'm for selling gold, but not for the ESAF. It causes
problem by forcing adjustment measures which make the poor
worse off."
"The bottom line is that the reason we're going through
all these circuitous financing techniques with the IMF--and
to a certain extent the World Bank--is because the two
institutions are unwilling to write down loans. We go
through this fiction so it will appear that they are being
repaid by their borrowers," a Senate staffer pointed out. |
