IMF Policies Lead to Global Deforestation

FOR IMMEDIATE RELEASE
American Lands Alliance
January 29, 2002
Contact: Jason Tockman, American Lands Alliance 740-594-5441
Steve Holmer, American Lands Alliance 202-547-9105

Important report from American Lands Alliance. Below is release announcing the report, followed by the executive summary. The report is available at americanlands.org/imf_report.htm

Report: IMF Policies Lead to Global Deforestation

Analysis of financial institution's loan programs exposes forest loss

Washington, DC-American Lands Alliance today released a report detailing the dramatic impact that the loans and policies of the International Monetary Fund (IMF) are having on forests around the world. The analysis found IMF complicity with deforestation in 15 countries of Africa, Latin America and Asia, including Brazil, Indonesia, Russia, Cameroon and Chile.

"The IMF's formula of promoting export-led growth and foreign investment, while simultaneously pressuring countries to slash funding for environmental programs, has been a recipe for accelerated deforestation in more than a dozen countries," said Jason Tockman, director of American Lands Alliance's International Trade Program and author of the report.

Under "structural adjustment programs" or SAPs, the IMF demands that client countries undertake a series of policy changes as a precondition for agency loans sought by countries seeking to avoid defaulting on debt payments to international lenders. Through these SAPs, the IMF has effectively realigned global economic relationships into an integrated, investor-friendly system. As detailed in IMF: Funding Deforestation, the forests of many countries have been devastated by these policies.

Excerpts from IMF: Funding Deforestation:

  • "The record shows that funding for environmental programs has been hampered by the significant cuts in government spending imposed by the IMF."

  • "Displacement of communities, devaluation of certain currencies, elimination of social services, and other IMF-driven downward pressures on the living standards of the poor have caused increased incursion into forests for the extraction of resources for survival, including wood for fuel and homes."

  • "The IMF prioritizes economic liberalization measures over key social and environmental objectives."

The report recommends a series of steps to reverse the IMF's negative impact on world forest resources, including the abandonment of the policies that are linked to deforestation, adoption of environmentally sensitive guiding principles, and assessments of the environmental impacts of loan programs. Greater transparency, debt cancellation for poor countries, attention to the issues of illegal logging and poaching, and elimination of government subsidies linked to forest loss are also called for in the report.

Countries analyzed in IMF: Funding Deforestation: Brazil, Cameroon, Central African Republic, Chile, Ecuador, Ghana, Guyana, Honduras, Indonesia, Ivory Coast/Cote d'Ivoire, Madagascar, Nicaragua, Papua New Guinea, Russia, Tanzania

Executive Summary

International Monetary Fund (IMF) loans and policies have caused extensive deforestation in each of the 15 countries of Africa, Latin America, and Asia studied in this report. This forest loss has occurred both directly, through the IMF's promotion of foreign investment in natural resource sectors, and austerity measures that cut spending on environmental programs; and indirectly, through programs that have unwittingly worsened the conditions of poverty, and by the IMF's insistence upon export-oriented economic growth.

Through "structural adjustment programs" (SAPs), the IMF influences countries' economic policies and practices by conditioning loans upon the acceptance of a series of trade and investment liberalization measures. Along with its partners -- most notably the World Bank and the World Trade Organization -- the IMF has been instrumental in promoting a regime of privatization, deregulation, foreign investment, and export-oriented growth. Through these policies, the IMF imposes a one-size-fits-all prescription, allegedly for the purpose of economic growth by increasing developing countries' access to hard currency. However, while meeting development objectives has proven elusive in most IMF client countries, the overall effect of these policies on forests globally has been devastating.

Although the architects of corporate globalization claim that trade and investment liberalization is the best strategy for improvements in environmental protection, the record shows that funding for environmental programs has been hampered by the significant cuts in government spending imposed by the IMF. Government spending on important environmental programs has been substantially reduced in Brazil, Nicaragua, Guyana, Papua New Guinea, Russia, Indonesia, Tanzania, and Cameroon. IMF-induced budget cuts have impeded the following activities:

  • Promotion of responsible forestry and sustainable development
  • Enforcement of forest and wildlife protection measures
  • Prevention of mining disasters
  • Demarcation of indigenous lands

Additionally, inadequate funding for regulatory agencies has created conditions for:

  • Widespread illegal logging, including in national parks and protected reserves
  • Corruption in regulatory schemes
  • The inability to respond rapidly to natural disasters
  • Extensive poaching of imperiled species

Long-term economic prosperity must be based on sustainable development patterns. Instead the IMF prioritizes economic liberalization measures over key social and environmental objectives. The IMF's primary economic liberalization mechanisms have included: reducing export taxes; relaxing mining and forestry codes; removing bans on raw log exports; offering tax holidays to foreign firms; lifting prohibitions on foreign investment, including land ownership; and otherwise eliminating barriers to trade. The institution's focus on promoting export-led growth and foreign investment in the natural resources sectors through these strategies has heavily impacted the world's forests. Absent real improvements in environmental safeguards, the IMF's formula has been a recipe for accelerated deforestation for the countries analyzed herein.

IMF policies have threatened forests and wildlife indirectly through the worsening of poverty conditions in Russia, Ghana, Ivory Coast, and Nicaragua. Through displacement of communities, devaluation of currencies, elimination of social services, and other IMF-driven downward pressures on the living standards of the poor, rural residents in many countries have been forced to exploit forest resources to fulfill their basic needs.