World Rainforest Movement

The IMF’s role in the destruction of tropical forests

Let us make no mistake. When the IMF talks about a “favourable environment,” it is referring to business, to a favourable environment for direct foreign investment through operations on the stock exchange, or indirect foreign investment through the operation of transnational companies. The sporadic references made to the environment in their loans, grants, documents and strategies are functional to their classical recipes based on adjustment and stabilization programmes, which if properly applied, should lead us to sustained development, understood of course in terms of the continuous growth of the GDP. The IMF continues to believe, or to insist on making us believe that there is a magic or “virtuous” circle in which “sustained” economic growth reduces poverty and increases available resources to improve the environment. Furthermore, this circle has its own feedback (1). Something similar to the invisible hand of Adam Smith.

The IMF itself confesses that it does not take environmental problems into account as it is limited by its mandate and by the scant preparation of its staff in such matters. This institution declares itself to specialize “only in issues referring to macro-economic, monetary, trade and tax policies on a national and international level” and that it is other organizations such as the World Bank, the United Nations or the regional development banks that are “better equipped” to address environmental problems.” (2). In this way, the IMF eludes all responsibility for the environmental impacts generated by its stabilization and structural adjustment programmes.

Three decades have gone by since the first structural adjustment experiments were implemented by the bloody dictatorships of Uruguay, Chile and Argentina in the mid-seventies. Since then and with no distinction of a historical, geographical, cultural or social nature, the IMF has been imposing a single recipe for any country attempting to access its funds, which supposedly aims at achieving economic growth. The IMF takes advantage of the opportunity to impose structural adjustment and stabilization programmes as a conditionality to obtain its loans. These include the implementation of measures aimed at overcoming the budgetary deficit through cuts in public expenditure, the implementation of privatization processes, deregulation of the economy including trade and financial liberalization and economic growth based on an increase in exports. These adjustments involve a structural reform of the State, making it possible to eliminate barriers preventing access to resources and the creation of an environment favourable to foreign investment. Such “barriers” include any type of social regulation (including measures for labour and environmental protection). Summing up, when a country has difficulties with its balance of payments and is on the verge of bankruptcy it finds itself forced to accept the IMF’s financial “assistance,” but in fact it really starts to sink in a process whereby it looses control of its resources (understood in the WIDE sense) and of its sovereignty.

The protests and demonstrations of the affected communities, civil society organizations and studies by environmental organizations have proved over and over again, that in most of the IMF client countries, in addition to the development objectives not being attained, the general results of these policies have been devastating on the environment” (3). And forest ecosystems do not escape this rule. In the year 2002, a study by the American Lands Alliance concluded that the International Monetary Fund (IMF) credits and policies caused a notorious increase in deforestation in Latin American, Asian and African countries possessing great biological wealth. The study points out that the IMF strategy of promoting growth based on exports and foreign investment, while putting pressure on the countries to cut back on their expenditure on environmental programmes, has also accelerated deforestation.” The IMF seems to have promoted the logging of endangered forests in Brazil, Cameroon, Chile, Ecuador, Ghana, Honduras, Indonesia, Côte d’Ivoire, Madagascar, Nicaragua, Papua New Guinea, the Central African Republic, Russia and Tanzania.

The response to this report by the IMF was that it would seem to have been based on “old or incorrect” information. The Fund argues that it has incorporated conditions requiring the reform of forestry policies – aimed at reducing illegal logging and at strengthening forest protection – and that it has even suspended loans to various countries in an attempt to halt illegal logging and deforestation (4). However, the truth is that so far, the Fund refuses to acknowledge the environmental impacts of its structural adjustment programmes.

For example, the study points out that in Brazil, where the tropical forests represent one third of all the rainforests left on the planet, the Government reduced its environmental expenses by almost two thirds, as a condition for an agreement on an emergency package of 41,500 million dollars signed with the IMF in 1998. This implied a budgetary reduction in which 10 of the 16 environmental programmes in Brazil – several of them aimed at enforcing forest exploitation standards and forest protection – ceased to be applied.

In Cameroon, one of the countries with the greatest biological diversity in Africa, the IMF managed to get it to devalue its currency and reduce taxes on exports of forest products. “This made forest exploitation more profitable, and increased the number of commercially viable species, thus increasing the volume logged per hectare.” As a result, the number of logging companies operating in Cameroon increased from 177 to 479 between 1990 and 1998, compared to the scant 106 operating in 1980, with the result that over 75 per cent of the country’s forests have been logged or will have been logged in the near future.

In Papua New Guinea, which hosts 1,500 species of trees, 200 species of mammals and 750 species of birds, half of which are endemic, cuts in public expenditure resulted in the dismantling of the Environmental and Conservation Department. To encourage the timber industry, the IMF managed to have taxes on forest exports cut from 33 per cent to between zero and five per cent in 1998. The result did not take long to appear: various large Malaysian logging companies immediately established themselves in Papua New Guinea, seriously affecting the forests of that country.

The IMF -which mainly reports to the United States Treasury- has not made any substantial changes to improve the situation. It has merely recognized that its policies have some impact on poverty, which has implied a cosmetic change in its structural adjustment programmes. No mention of policies favouring the environment. On June 11, the Ministers of Finance of the G8 made a public declaration on “Development and Debt” including a proposal to cancel the multilateral debt to be submitted to the Annual Meetings of the IMF, the World Bank and the African Development Bank in September 2005. This cancelling of the multilateral debt is still linked to observation of conditions exacerbating poverty, over-exploitation and plundering of natural resources and the perpetuation of domination over the South. In cancelling the debt, no restitution or reparation is commuted for slavery and colonization, for the looting of wealth and natural resources, the exploitation of labour, for human, social and ecological destruction in the South caused by economic activities, military operations and wars protecting the interests of international cleptocracy (5).

The silence of the IMF technocrats, produced by universities such as Harvard and its peers, is not a mere coincidence. They have been trained in function of a single objective: that of removing the obstacles hindering access and control of the planet’s natural resources by the major corporations. Or perhaps the perpetuation of the United States trade deficit aimed at financing the business of world cleptocracy. Once more, the end justifies the means: letters of intent are signed, workshops are organized to build up technical capacity, extortion is exerted with threats of closing access to the markets of international capital and those who have the courage to oppose this neo-liberal development model are repressed. The actors are powerful and well-known: the governments of the rich countries in the North, the multinational corporations, and the corrupt elites and oligarchies of the South. The result can in no way be called development, not if it is done at the expense of destroying healthy ecosystems, the impoverishment and social exclusion of the communities that inhabit them or that depend on them for survival, and the perpetuation at all costs of the present system of global production.

By Marta Zogbi, Friends of the Earth International, e-mail:

Sources consulted:
1. Ficha técnica – Abril de 2004 “El FMI y el medio ambiente”,
2. “The IMF and the Environment”, Ved P. Gandhi, July 28, 1998
3. “The IMF: Funding Deforestation” by Jason Tockman, American Lands Alliance. The complete report may be read (in English) at
4. AMBIENTE: FMI bajo fuego por promover desforestación by Danielle Knight
5. ADITAL 22.06.05 – ARGENTINA “Respuesta de Jubileo Sur a la propuesta sobre Deuda del G8”