IMF urged to end surcharges to help indebted countries

Source: Christian Aid

As the IMF and World Bank's Spring Meetings get underway [April 15-20], the IMF is being urged to abolish its surcharge policy by over 540 civil society organisations who argue the payments unfairly punish the most indebted borrowers and make it harder for those countries to get out of debt.

Borrowers currently required to pay surcharges include crisis-hit countries like war-ravaged Ukraine; Egypt, which is experiencing a hunger crisis; and Pakistan, which has been hit by historic floods in recent years.

The international development charity, Christian Aid, has been operating in Ukraine since Russia's full-scale invasion in 2022. Without sustained funding, the charity argues, many of the humanitarian projects that support millions of displaced people could be at risk.

Emma Burgisser, Christian Aid's Economic Justice Lead, said: "These surcharges compound debt burdens for countries facing crises, which is the exact opposite of what the IMF should be doing to fulfil its mandate. Indeed, it is utterly unjust that the Ukrainian people are paying interest on the very loans they need to survive the war with Russia. The IMF board must get serious and cancel these surcharges so money can be better directed to people in need."

Altogether, indebted countries are on course to pay $9.8 billion in surcharges in the next five years, while analysis by the Washington-based Center for Economic and Policy Research shows that the IMF has met its target for its precautionary balances. This means that the institution is ahead of its fundraising targets and should not have to rely on raising surcharges to fulfil its mission.

The IMF's surcharge policy has come under increased scrutiny in recent years, as many developing countries, civil society organisations and UN experts are increasingly calling attention to how it can undermine the ability of governments to protect human rights during times of crisis.

The letter and signatories can be found here: https://menafemmovement.org/end-surcharges-campaign/