The Creditors	Indebted Countries	Civil Society / Debt Campaigns

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There are three groups of creditors. These include:

• Bilateral Creditors
• Multilateral Creditors
• Commercial Creditors

Bilateral Creditors

Bilateral Creditors are individual countries. Debt owed to them generally results from guaranteed export credits. Export credits are given by western governments to help secure overseas trade deals for exporters in their own countries. Bilateral creditors include the G8 nations.

G8 stands for the "Group of Eight Countries".

The G8 are rich countries including Italy, the USA, the UK, France, Germany, Japan, Canada and Russia.

Without Russia the group are known as the G7. The G7 are the seven rich countries which make decisions on debt cancellation for the poorest countries.

The G8 Summit - see here for details about the G8 Summit

The Mulitlateral Creditors

These are International Financial Institutions (IFIs) including the International Monetary Fund (IMF) and the World Bank (WB). Both of these organisations were established at the end of the World War II at the Bretton Woods Conference held in the USA. This world conference, hosted by the Allies, set out to determine the fate of the post war international economic order

The World Bank (WB)

The World Bank was intially established to re-build Europe after World War II. Today, it provides long term loans to developing countries. Traditionally the World Bank has funded large scale infrastructure projects, but it now also lends to the social sector. The World Bank claims that poverty reduction is its overall aim. Loans to the poorest countries are usually at concessionary rates, with the money to be repaid over fifteen to twenty years.

International Monetary Fund (IMF)

The International Monetary Fund was originally established to maintain an orderly international monetary system where exchange rates were kept stable and where free trade could prosper. Countries experiencing short term Balance of Payments problems (where imports exceed exports) could borrow from the IMF, rather than devalue their currency. However, that role has changed. Since 1982, when Mexico came close to defaulting on its debt, the IMF has been providing loans to countries on the brink of bankruptcy.

• IMF and World Bank loans come with conditions. If these are not adhered to aid or debt relief may be withheld.
  
  
• The IMF and the World Bank are effectively controlled by the governments of the richest nations.
  
  
• The voting rights within each institution are determined by the level of a country’s financial contribution.
  
  
• In the IMF, The United States of America has seventeen per cent of the votes. Together, the G7 countries the USA, Britain, France, Germany, Italy, Japan, and Canada control nearly half the votes. Most of the important decisions at the IMF require an 85 per cent majority, so the USA has veto power over the most critical decisions.
  
  
• Likewise with the World Bank, the United States has fifteen per cent of the voting share but represents only five per cent on population size.

The IMF and World Bank are both membership based organisations. The G8 are the most powerful members of both organisations.

For more information on the WB and IMF see: www.brettonwoodsproject.org

Commercial Creditors

The commercial creditors are the private, commercial banks, for example Citibank, and Chase-Manhattan. They were the principle lenders in the 1970s. The banks had the idea then that somehow countries could not go bankrupt. In the 1980s when some countries did threaten bankruptcy, much of this commercial debt was transferred to the IMF and the World Bank.