The International Monetary Fund (IMF) - What Is It? Why Native Filipinos Should Oppose It (Updated 6/10/2013 & 7/21/2015)
Our homeland with its rich natural resources gives us no reason to be a people in dire poverty. But due to perennial misrule allowed by the complacency, selfishness and indifference by our so-called leadership and so-called educated among us: mainly middle and high-income class (Socioeconomic Classes A-B-C) we are.
Meanwhile, extreme impoverishment has crept on the majority (socioeconomic classes D-E) of our fellow native Filipinos in the last 33 years as precipitated by the Marcos Dictatorship.
Though the first significantly large foreign borrowing began during the time of President Diosdado Macapagal, his successor Ferdinand Marcos precipitated the great national economic slide by incurring humongous foreign debts, some of which turned out to be odious debts, through the IMF-WB tandem.
The foreign debt addiction continues under subsequent and subservient regimes (Cora Aquino, Fidel Ramos, Joseph Estrada, Gloria Macapagal-Arroyo and expectedly the next regimes -- all of whom come from the top socioeconomic class with their insatiable selfish, vested interests for more economic and political power, in partnership with foreign interests while keeping the native Filipino majority ignorant, entertained by trash pop culture media and suppressed with military and extrajudicial threats.
These foreign debts, which any informed and thinking Filipino knows, have burned as much as 70% of our yearly national budget as foreign debt installment payments (or 90% of annual revenues nowadays, as De Venicia claims).
De Venicia wants to fix our foreign debts by giving/surrendering away our national assets to these financial institutions and/or their consortium of creditors rather than asking for a moratorium of debt payments, defaulting, etc.
How to deal with debts bravely and decisively is not in the table of our so-called leaders who have no balls, so to speak. Given the ignorance of the native majority, who are busy with mere,daily survival and thus without time; and consequent incapacity to understand what really is going on.
Below is an introduction to the IMF which together with the World Bank (WB) and the latter's supposedly good mission of poverty reduction, both instead turned intoeconomic inquisitors and executioners of poor countries like ours.
IMF/WB methodologies and ways to further screw a poor country/people, further continue to pressure a bankrupt, un-nationalistic native rulers and citizenry to be "more efficient," include recommendations to:
- reduction in public expenditures, particularly social services, i.e. public health, education, etc.;
- improve and raise tax collection, (Value-Added tax VAT was started under Gloria Macapagal Arroyo);
- increase exports, etc. (agribusiness, labor,etc).
- influence our educational system (designed to direct/make us absolutely adhere to the doctrine of economic liberalism (neoliberalism)-- an economic system that has not worked in the long-run betterment of the native Filipino majority since our American colonization);
- privatization of public companies;
- strict control of organized labor;
- deregulation of the national economy;
- decontrol of global financial flows.
All these to perpetuate the acceptance of Neoliberalism and Global Order,the economic system and its "new" world order -- now euphemistically labeled as "globalism or globalization" -- which makes our homeland and the majority of our fellow native, Malay Filipinos what we are today: impoverished, ignorant, and thus desperate cowards.
UPDATES (6/10/2013 & 7/21/2015):
ADDENDUM: The millstone on the necks of present and future generations of native (Malay) Filipino majority in the Philippines. With government’s -domestic and foreign- outstanding debt at P5.32 trillion, it means that each Filipino owes P55,469, based on the latest population estimate of 96 million.(Phil Daily Inquirer, 4/20/2013)
Philippine External/Foreign Debt:
- When Marcos came to the presidency after defeating Pres. Diosdado Macapagal in 1965, our foreign debt stood at $600 million; then it grew to $2 billion in 1972 and $26 billion by the time the USA helped him flee to Hawaii in 1986. With Post-Marcos successor regimes of Cora Aquino, Fidel Ramos, Joseph Estrada, Gloria Arroyo and now Noynoy Aquino, our foreign debt ballooned from $26 billion to $60.5 billion in 2010 and $ 60.3 billion - ending Y2012 BSP Statistical Data; and now at $71 B as of June 2015, BSP)
- Throughout these years to the present, the ruling regimes oftentimes do not pay beyond the required minimum payments on the loans. (Banks love installment payments, as anyone who have loans/credit cards know, as much continuous and maximum profits are made by the creditors -- especially more so from countries, which are afraid to default.
- Thanks to Cora Aquino, naive, weak and incompetent for the presidential office who-- rather than taking opportunity of worldwide popularity/sympathy and working for an economic breathing spell for the native Filipino majority (suffering from a series of peso devaluations, plant closures and unemployment, high prices, etc.) --instead decided to please the applauding foreign governments, i.e. USA, Japan, etc. and foreign institutions/banks by not asking them for payment moratorium/rescheduling; and promised uninterrupted loan payments. Worst, she passed into law the prioritizing of foreign debt payments among others; all these she did despite the advice of then NEDA Director-General Solita Collas-Monsod).
- Compared with the South Koreans who were devastated by the 1998 financial crisis and had to be bailed out by borrowing $50 billion from the IMF, the South Koreans completely paid off their IMF debt by August 2001, almost two years ahead of schedule! As Yoon Dae-hee, a spokesman for the South Korean Ministry of Finance and Economy. "We've retaken our economic sovereignty," Yoon said."From now on, we no longer need prior consultations with the IMF in planning and executing our economic policies."
- The present PenoyAquino regime claims we have more foreign reserves than foreign debt, mainly due to OFW remittances at $21 billion (2012), else the Philippines would be in the red all these years). It's time we pay off the foreign debts in significant amount towards the loan principal and not just the accumulating interests and be done with IMF/WB dictates on our national economy. Foreign Direct Investments (FDI) totaled only $1.25 billion for 2012. - BSP Statistical Data).
- We also pay some of these foreign debts via "asset conversion," whereby our government are forced to "privatize" or surrender some public assets like public land or facility. It may be the case for some of our former military bases that are now converted and owned privately, e.g. Fort Bonifacio (The Fort), etc.
- With the minimal FDI inflow compared to OFW remittances each year, we should find it suspicious why our rulers and those who call themselves (economic) reformers, under the foreign-influenced and local resident Chinese-led coRRECT Movement who insist in dismantling the already watered-down nationalist provisions in our 1987 Philippine Constitution "to attract foreign investments "
- We therefore should instead defy the IMF/WB/WTO and revert to a more truly nationalistic Filipino First Policy in our homeland which of course can be realized only by a more informed, nationalistic and thus united native citizenry - this latter being the objective task, though difficult even dangerous at times, of those amongst us who know and understand "what's going on."
- What Can We Do?
We can not expect the present and subsequent regimes as these are populated by mainly political dynasties, oligarchs and so-called technocrats. Bloody revolution or not, we need to educate ourselves and our fellow native Filipino majority about what's going on politically, economically, culturally, etc. Because a true democracy can be realized, that is, change and work for the citizenry only when the latter are well-informed; so it can actively select leaders to peacefully and/or forcefully demand socioeconomic and political changes for the common good.
OFW Remittances BSP Statistics (2010 to 2015): http://www.bsp.gov.ph/statistics/keystat/ofw.htm
Philippine Foreign Debt BSP Statistics (2012 to 2015): ttp://www.bsp.gov.ph/statistics/spei_pub/Table%2005.pdf
What is the IMF?
The International Monetary Fund (IMF) and the World Bank (WB) were created in 1944 at a conference in Bretton Woods, New Hampshire, and are now based in Washington, DC. The IMF was originally designed to promote international economic cooperation and provide its member countries with short term loans so they could trade with other countries (achieve balance of payments).
Since the debt crisis of the 1980's, the IMF has assumed the role of bailing out countries during financial crises (caused in large part by currency speculation in the global casino economy) with emergency loan packages tied to certain conditions, often referred to as "structural adjustment policies (SAPs)."
The IMF now acts like a global loan shark, exerting enormous leverage over the economies of more than 60 countries. These countries have to follow the IMF's policies to get loans, international assistance, and even debt relief. Thus, the IMF decides how much debtor countries can spend on education, health care, and environmental protection.
The IMF is one of the most powerful institutions on Earth -- yet few know how it works.
1. The IMF has created an immoral system of modern day colonialism that SAPs the poor
The IMF -- along with the World Trade Organization (WTO) and the World Bank -- has put the global economy on a path of greater inequality and environmental destruction. The IMF's and World Bank's SAPs ensure debt repayment byrequiring countries to:
- cut spending on education and health;
- eliminate basic food and transportation subsidies;
- devalue national currencies to make exports cheaper;
- privatize national assets; and
- freeze wages.
Such belt-tightening measures increase poverty, reduce countries' ability to develop strong domestic economies and allow multinational corporations to exploit workers and the environment.
A recent IMF loan package for Argentina, for example, is tied to cuts in doctors' and teachers' salaries and decreases in social security payments.. The IMF has made elites from the Global South (poor/underdeveloped countries) more accountable to First World (developed/rich) elites than their own people, thus undermining the democratic process.
2. The IMF serves wealthy countries and Wall Street
Unlike a democratic system in which each member country would have an equal vote,rich countries dominate decision-making in the IMF because voting power is determined by the amount of money that each country pays into the IMF's quota system. It's a system of one dollar, one vote.
The U.S. is the largest IMF shareholder with a quota of 18 percent. Germany, Japan, France, Great Britain, and the US combined control about 38 percent. The disproportionate amount of power held by wealthy countries means that the interests of bankers, investors and corporations from industrialized countries are put above the needs of the world's poor majority.
3. The IMF is imposing a fundamentally flawed development model
Unlike the path historically followed by the industrialized countries, the IMF forces countries from the Global South to prioritize export production over the development of diversified domestic economies.
Nearly 80 percent of all malnourished children in the developing world live in countries where farmers have been forced to shift from food production for local consumption to the production of export crops destined for wealthy countries.
The IMF also requires countries to eliminate assistance to domestic industrieswhile providing benefits for multinational corporations -- such as forcibly lowering labor costs. Small businesses and farmers can't compete.
Sweatshop workers in free trade zones set up by the IMF and World Bank earn starvation wages, live in deplorable conditions, and are unable to provide for their families. The cycle of poverty is perpetuated, not eliminated, as governments' debt to the IMF grows.
4. The IMF is a secretive institution with no accountability
The IMF is funded with taxpayer money, yet it operates behind a veil of secrecy. Members of affected communities do not participate in designing loan packages. The IMF works with a select group of central bankers and finance ministers to make polices without input from other government agencies such as health, education and environment departments. The institution has resisted calls for public scrutiny and independent evaluation.
5. IMF policies promote corporate welfare
To increase exports, countries are encouraged to give tax breaks and subsidies to export industries.
Public assets such as forestland and government utilities (phone, water and electricity companies) are sold off to foreign investors at rock bottom prices.
In Guyana, an Asian owned timber company called Barama received a logging concession that was 1.5 times the total amount of land all the indigenous communities were granted. Barama also received a five-year tax holiday.
The IMF forced Haiti to open its market to imported, highly subsidized US rice at the same time it prohibited Haiti from subsidizing its own farmers. A US corporation called Early Rice now sells nearly 50 percent of the rice consumed in Haiti.
6. The IMF hurts workers
The IMF and World Bank frequently advise countries to attract foreign investors by weakening their labor laws -- eliminating collective bargaining laws and suppressing wages, for example. The IMF's mantra of "labor flexibility" permits corporations to fire at whim and move where wages are cheapest.
According to the 1995 UN Trade and Development Report, employers are using this extra "flexibility" in labor laws to shed workers rather than create jobs. In Haiti, the government was told to eliminate a statute in their labor code that mandated increases in the minimum wage when inflation exceeded 10 percent. By the end of 1997, Haiti's minimum wage was only $2.40 a day.
Workers in the U.S. are also hurt by IMF policies because they have to compete with cheap, exploited labor. The IMF's mismanagement of the Asian financial crisis plunged South Korea, Indonesia, Thailand and other countries into deep depression that created 200 million "newly poor."
The IMF advised countries to "export their way out of the crisis." Consequently, more than US 12,000 steelworkers were laid off when Asian steel was dumped in the US.
7. The IMF's policies hurt women the most
SAPs make it much more difficult for women to meet their families' basic needs. When education costs rise due to IMF-imposed fees for the use of public services (so-called "user fees") girls are the first to be withdrawn from schools. User fees at public clinics and hospitals make healthcare unaffordable to those who need it most.
The shift to export agriculture also makes it harder for women to feed their families. Women have become more exploited as government workplace regulations are rolled back and sweatshops abuses increase.
8. IMF Policies hurt the environment
IMF loans and bailout packages are paving the way for natural resource exploitationon a staggering scale. The IMF does not consider the environmental impacts of lending policies, and environmental ministries and groups are not included in policy making.
The focus on export growth to earn hard currency to pay back loans has led to an unsustainable liquidation of natural resources. For example, the Ivory Coast's increased reliance on cocoa exports has led to a loss of two-thirds of the country's forests.
9. The IMF bails out rich bankers, creating a moral hazard and greater instability in the global economy
The IMF routinely pushes countries to deregulate financial systems. The removal of regulations that might limit speculation has greatly increased capital investment in developing country financial markets. More than $1.5 trillion crosses borders every day.
Most of this capital is invested short-term, putting countries at the whim of financial speculators. The Mexican 1995 peso crisis was partly a result of these IMF policies.
When the bubble popped, the IMF and US government stepped in to prop up interest and exchange rates, using taxpayer money to bail out Wall Street bankers. Such bailouts encourage investors to continue making risky, speculative bets, thereby increasing the instability of national economies.
During the bailout of Asian countries, the IMF required governments to assume the bad debts of private banks, thus making the public pay the costs and draining yet more resources away from social programs.
10. IMF bailouts deepen, rather then solve, economic crisis
During financial crises -- such as with Mexico in 1995 and South Korea, Indonesia, Thailand, Brazil, and Russia in 1997 -- the IMF stepped in as the lender of last resort. Yet the IMF bailouts in the Asian financial crisis did not stop the financial panic -- rather, the crisis deepened and spread to more countries.
The policies imposed as conditions of these loans were bad medicine, causing layoffs in the short run and undermining development in the long run.
In South Korea, the IMF sparked a recession by raising interest rates, which led to more bankruptcies and unemployment. Under the IMF imposed economic reforms after the peso bailout in 1995, the number of Mexicans living in extreme poverty increased more than 50 percent and the national average minimum wage fell 20 percent.
"The ruling elites know who their enemies are, and their enemies are the people, the people at home and the people abroad. Their enemies are anybody who wants more social justice, anybody who wants to use the surplus value of society for social needs rather than for individual class greed, that's their enemy." – Michael Parenti
"You show me a capitalist, I'll show you a bloodsucker" - Malcolm X, 1965
"Capitalism and altruism are incompatible; they are philosophical opposites; they cannot coexist in the same man or in the same society" - Ayn Rand, 1961
"The glory of the United States is business" - Wendell L. Willkie, 1936
and yet deprecate agitation
are men who want crops without
plowing up the ground;
they want rain without thunder and
They want the ocean without the
awful roar of its waters.
This struggle may be a moral one
or it may be a physical one
or it may be both moral and physical
but it must be a struggle.
Power concedes nothing without a
It never did, and never will." – Frederick Douglass, American Abolitionist, Lecturer, Author and Slave, 1817-1895