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the
main actors : the creditors |
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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.
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