My dear friends, I bring you bad news. The IMF offered to help the countries affected by the Tsunami.
Good! Will say most of you (naive!).
Bad, sais I. Because the IMF is not just giving money… It is lending it:
For our part, the IMF stands ready to provide financial assistance to affected countries, in the first instance through our Emergency Natural Disaster Assistance facility. This financing, which could be on the order of US$1 billion for the most affected countries, could be made available quickly and without an IMF program.
In other words: It is not a gift, it is a loan.
Emergency assistance loans are subject to the basic rate of charge, and should be repaid within 3¼ to 5 years. Since May 2001, for post-conflict cases which are eligible for the IMF’s Poverty Reduction and Growth Facility (PRGF), the interest rate on loans has been subsidized down to 0.5 percent per year, with the interest subsidies financed by grant contributions from bilateral donors, Recently, the Executive Board agreed to consider a similar subsidization of emergency assistance for natural disasters.
And they also want interests on it. How generous!
Looking at the press. I noticed that the story had been taken by various news, yet only one clarified that it was not a gift.
You know, yesterday evening I was speaking with a friend who told me of a new book “Confessions of an Economic Hit Man”(english review here). It is the story of John Perkins…
…John Perkins, a former respected member of the international banking community. In his book Confessions of an Economic Hit Man he describes how as a highly paid professional, he helped the U.S. cheat poor countries around the globe out of trillions of dollars by lending them more money than they could possibly repay and then take over their economies
Also note how the order of magnitude of the loan that is being offered right now:
This financing, which could be on the order of US$1 billion for the most affected countries, could be made available quickly and without an IMF program.”
Is of the same order of magnitude of the one that John Perkins was offering:
my real job was deal-making. It was giving loans to other countries, huge loans, much bigger than they could possibly repay. One of the conditions of the loan–let’s say a $1 billion to a country like Indonesia or Ecuador–and this country would then have to give ninety percent of that loan back to a U.S. company, or U.S. companies, to build the infrastructure–a Halliburton or a Bechtel.
So, the IMF has offered a loan.
“Thanks, but no thanks” should those country answer.
While the rest of the world collects the money (this really as a gift) to help.
Will those countries be strong enough to refuse it.
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