news analysis advocacy
No Easy Victories: African Liberation
and American Activists over a Half Century
New book discount offer!
tips on searching
   the web



Visit the AfricaFocus
Country Pages

Burkina Faso
Cape Verde
Central Afr. Rep.
Congo (Brazzaville)
Congo (Kinshasa)
Côte d'Ivoire
Equatorial Guinea
São Tomé
Sierra Leone
South Africa
South Sudan
Western Sahara

Get AfricaFocus Bulletin by e-mail!         Read more on |Africa Economy & Development||Africa Debt|
URL for this file:

Print this page

Africa: Gold Industry Blocking Debt Plan

AfricaFocus Bulletin
Jun 3, 2005 (050603)
(Reposted from sources cited below)

Editor's Note

"If you could improve the lives of hundreds of millions of the world's most destitute people with a program that might - just might - temporarily reduce the profits of the global gold industry, most people would probably think it is worth doing. Even most members of Congress. That's why it has been so disturbing to see gold producers strong-arm Congress and the White House into blocking just such a desperately needed measure." - The New York Times, June 3, 2005

Time is running out for agreement by rich countries on new measures to cancel debt of developing countries. The chances are growing that the G8 summit next month in Scotland will again be the occasion for more rhetoric rather than for action. The latest obstacle, highlighted in a New York Times editorial today, is lobbying by Newmont Mining and other large gold mining companies, to block the quickest and simplest way to cancel a significant part of the debt - namely, sale of International Monetary Fund gold stocks.

A coalition of U.S. groups has launched a campaign to put direct pressure on Newmont Mining to stop blocking these sales. This issue contains the action alert from this coalition, and excerpts from an international NGO policy paper on debt and IMF gold sales. For more information see particularly

A free fax to Newmont Mining can be sent through the website of Global Exchange at

For the full New York Times editorial:

For previous AfricaFocus Bulletins with additional background on the issue of debt:

Another AfricaFocus Bulletin, also sent out today, focuses on a new Human Rights Watch report highlighting the other end of the gold production chain and its role in promoting violence and human rights atrocities in the northeastern region of the Democratic Republic of the Congo.

++++++++++++++++++++++end editor's note+++++++++++++++++++++++

50 Years is Enough * Essential Action * Global AIDS Alliance Global Exchange * Health GAP * Jubilee USA

Action Alert: Gold Industry Blocking Debt Cancellation Plan

Call on Newmont Mining to Reverse Opposition to IMF Gold Sales; Lives are at Stake!

International debt payments are draining poor countries of resources desperately needed to address health, education and many other pressing needs.

After years of offering nothing more than half-hearted measures and worse, the rich countries have agreed to cancel the debts of the poorest nations to the International Monetary Fund (IMF) and World Bank. But they continue to differ over how to do it.

It is now clear a compromise agreement among the rich countries over cancellation of IMF debt can only be reached if sale of IMF gold is a component of the financing package for debt cancellation.

But a decision to sell some of the IMF's stock of gold is being blocked by the gold industry, led by the world's largest gold producing corporation, Newmont Mining Co. Newmont and the industry say that IMF gold sales will lower the world gold price, but they ignore a proposal from the IMF itself that would ensure IMF gold sales have no net impact on the world gold market.

Newmont's misguided opposition is on the brink of sabotaging IMF debt cancellation -- thus ensuring millions of poor people will be deprived the benefit of IMF debt cancellation. This is a life-and-death matter.

TAKE ACTION: Call and fax Newmont's office and Board Members, demanding they reverse their position and publicly state and communicate to Congress and the White House their revised position.


  • Ensuring debt cancellation is a humanitarian imperative;
  • There's no reason for Newmont to oppose IMF gold sales, since they can be accomplished with no impact on the world gold price;
  • Newmont must retract its opposition to IMF gold sales, and publicly state that it is open to IMF gold sales;
  • Action now is imperative, before the G8 (the rich countries) meet in July;
  • Newmont's failure to retract its opposition to IMF gold sales will mean poor countries waste billions of dollars on debt payments to the IMF, and will consign millions of people to needless suffering, as they are deprived of health, education, clean drinking water and other services that could be made available with debt cancellation.


CONTACT: Newmont Mining Corporation, 1700 Lincoln Street, Denver, Colorado, USA 80203. FAX (303) 837-6034.
Investor Relations Contacts:
Randy Engel, Phone: (303) 837-6033 Email:
Wendy Yang Phone: (303) 837-6141 Email:

Contact Board Members, listed here:

More details follow below.

Impoverished countries are impoverished in part because of the huge debt repayments global creditors like the International Monetary Fund and World Bank collect from them. Every year, sub-Saharan African pays about $13 billion to those institutions and others in wealthy countries - a figure that is roughly equal to the amount the United Nations estimates is required to combat the AIDS pandemic in Africa. Developing countries, in fact, send more money to the wealthy countries than they get in grants, loans, and other forms of aid. It's a deadly, backward game.

High-level talks among the G8 governments have been going on for nearly a year in response to U.S. and U.K. proposals for more substantial debt cancellation plans. The proposals could be the most substantial debt plans in decades. The target for agreement has been the summit of G8 heads of government in early July in Scotland.

The plan is now in grave danger. That's because the major actors cannot agree on how to "finance" the debt cancellation. The IMF has been sitting on an endowment of about $40 billion worth of gold since its founding. The massive gold stock is used for nothing other than ensuring "confidence" in its financial stability. It earns no interest and makes no resources available to anyone.

The U.K. and other governments are in favor of selling some of the gold in order to "finance" cancellation of debt owed to the IMF. Those are often the biggest debt problems for impoverished countries, because the IMF is a "preferred creditor," which means it must be paid back before all other creditors. And as long as a country is indebted to the IMF, it must accept harsh economic policy conditions that enrich corporations while depriving the most vulnerable people of opportunities. If the world's poorest countries are to recover and thrive, freeing them from IMF debt is imperative.

So what's stopping them? The U.S. government.

It's not that there is any compelling economic reason to oppose the sales. Nor does the Bush Administration put a particularly high priority on gold markets. But at least one politically powerful company in the Western states has decided to use its muscle to oppose any IMF gold sales. And because any sale of IMF gold requires, for complex reasons, the approval of the U.S. Congress, it has been able -- by getting 12 Senators from Western states to send a letter to Treasury Secretary John Snow - to convince the Administration it cannot support gold sales.

That company is Newmont Mining, the biggest gold mining concern in the U.S. They say they do not want to risk a drop in the price of gold that might result from the introduction of a large quantity in world markets.

Newmont executives have seen presentations demonstrating that the sale of IMF gold would be accomplished in a way that would have no impact on world markets --through an agreement with European central banks that regularly sell gold -- and the IMF itself has made it clear that IMF gold sales done through the so-called Central Bank Gold Agreement would result in no net impact on the world gold market. Yet Newmont continues to refuse to remove its opposition to IMF gold sales.

The misguided assertion of interest by this gold multinational stands against a chance to emancipate impoverished peoples and countries - to provide healthcare, shelter, food, economic development.

We must fight to reverse this absurd and outrageous situation quickly. July is approaching, and solutions to the IMF debt problem are rapidly falling off the G8 agenda.

TAKE ACTION: Call and fax the Company's office and Board Members, demanding they reverse their position and publicly state and communicate to Congress and the White House their revised position. Urge current and potential investors in the company to complain about the position of the company. Say you have decided to not purchase Newmont stock because of this issue. Submit opinion pieces and letters to the editor exposing the company's misguided opposition. Call radio call-in shows to express your view. Circulate a joint letter to Newmont, asking religious and community groups in the state to sign. Remind people that stopping AIDS and poverty is a matter of compassion and justice, and it also is critical to global security.

Note that Newmont's policy states: "Newmont's future is dependent on its ability to develop, operate and close mines consistent with our commitment to sustainable development, protection of human life, health, the environment, and to adding value to the communities in which we operate. We understand the actions and conduct of every Newmont employee and contractor are the basis on which our stakeholders will evaluate our commitment to achieving the highest standards of social responsibility."

For more information on Newmont and IMF gold sales, see:

Sponsoring organization websites:

Sell IMF gold to cancel the debt: decision time is now

13th April 2005

[Excerpts. For full report see]

Signatory organisations:


The European Network on Debt and Development (EURODAD) is a network on 48 NGOs in 15 European countries who work on issues related to debt and finance, poverty reduction policies and empowerment. ...


CIDSE (Cooperation Internationale pour la Solidarite et le Dveloppement) is an alliance of 15 Catholic development organisations from Europe and North America. ...


AFRODAD is a research, lobby and advocacy regional organisation seeking to secure positive policy changes to redress Africa's debt and development crisis in order to achieve equitable and sustainable development that will lead to an African and worldwide prosperous society. ...

Jubilee USA

... over 60 organizations including labor, churches, religious communities and institutions, AIDS activists, trade campaigners and over 9,000 individuals are active members of the Jubilee USA Network.

Halifax Initiative

... Canadian NGOs formed the Halifax Initiative in December 1994 to ensure that demands for fundamental reform of the international financial institutions were high on the agenda of the G7's 1995 Halifax Summit. ...

Executive Summary

Debt owed to the International Monetary Fund (IMF), World Bank and other multilateral institutions has grown rapidly in recent years and these institutions are now the major creditors of the world's poorest countries. Because there are serious consequences for countries which default on payments to these bodies, multilateral debt can be extremely onerous for countries struggling to provide for even the most basic social and development needs of their citizens.

Every year six million children die from malnutrition before their fifth birthday. Every day more than 800 million people go to bed hungry and 24 thousand die of starvation. HIV/AIDS kills more than 2 million people every year and adds to the league of millions of orphans in developing countries.

Civil society organisations across the globe have long advocated the use of the International Monetary Fund's impressive and massively undervalued gold reserves to fund further debt relief for impoverished nations. Now the viability of this proposal, after years of opposition, has been formally recognised by the staff of the IMF in a new paper. The paper states clearly that it is possible to sell large amounts of gold on the open market without negative impact on world gold prices. Gold sales could be managed within the framework of the Central Bank Gold Agreement (CBGA). This acknowledgement will alleviate the concerns of gold producing nations, many of which are low-income countries. The paper also states that the Fund's Articles of Agreement provide for the outright sale of gold at prevailing market prices, the proceeds of which could be used to cancel impoverished countries' debts. In 2005, civil society organisations are coming together under the banner of the Global Call to Action Against Poverty. This worldwide mobilisation for action on debt, aid and trade is the biggest civil society movement since Jubilee. Now is the time for leaders of the rich world when they meet in Washington on 15 April for the Spring Meetings of the IMF and World Bank to act!

In light of the massive resource gap faced by impoverished nations to meet the MDGs, we the signatory organisations to this paper call on world leaders to support:

  • The phased sale of all of the IMF's gold reserves in the framework of the Central Bank Gold Agreement to fund debt cancellation for impoverished nations. It is not justifiable to leave these resources idle;
  • Resources from these gold sales should be used to support the cancellation of debts of all those countries which are unable to meet the MDGs by 2015;
  • The proceeds of these gold sales should be used not just to cover debts owed to the IMF, but debts to other multilateral development banks as well.

The clock is ticking every 3.6 seconds someone in the developing world dies of starvation. Every 30 seconds, a child in Africa is killed by malaria, a preventable disease. Too many have died and too many lives have been blighted. We cannot afford to sit on our hands anymore. Every year, every month, every day and every second of delay is morally unacceptable. The time to act is now! The world is watching!

Since the G7 began discussing proposals for up to 100% debt cancellation in June 2004, more than 4 million children under five have died. How many millions must perish before world leaders move from rhetoric to action! ...

IMF Gold: It's Possible!

The IMF is the world's third largest holder of gold after the United States and Germany. It holds 103.4 million ounces of gold (3.217 tons) currently valued at US$ 9 billion. At end-2004, its market value was estimated at around US$ 45 billion. Civil society organisations across the globe have consistently argued that the IMF's massively undervalued gold reserves constitute a considerable (but idle) resource which should be put to productive use to cancel the multilateral debt of the poorest countries. Several studies by NGOs have shown that the gold market can absorb the sale of significant amounts of gold without negative consequences on world gold prices, provided that gold sales are conducted in an open and transparent manner over a reasonable period of time (for example 20 years).

The IMF, in its paper, has now finally acknowledged that this is in fact possible. In particular, it endorses the arguments long put forward by civil society organisations that phased gold sales within the framework of the Central Bank Gold Agreement (CBGA) or direct sales to gold purchasing central banks are possible. It states that "the CBGA has supported the capacity of the gold market to handle significant official sales by conducting sales in a transparent and predictable manner". ...

The paper also fully endorses NGO arguments that a revaluation of gold reserves should be avoided because of the significant transaction costs associated with such a measure. ... It recommends therefore that any future operation involving the use of gold should be "conducted through outright sales rather than off-market transactions as used in 1999-2000". ...

A Question of Political Will

This recognition that gold sales are indeed technically possible represents a clear victory for developing countries around the world. The paper, however, does not go nearly far enough. For example, the IMF recommends an overall sale of between only 13 to 16 million ounces of gold (around 12.5% and 15.5% of the IMF's total gold reserves). It also recommends using only the profits from gold sales to cancel poor country debt while it retains the nominal value. Sadly, the IMF also does not appear to want to consider the possibility that its gold reserves could be used to cancel some of the debts owed to other multilateral institutions such as the World Bank. Nevertheless, the technical arguments are won. ... It is now therefore simply a question of political will. ...

Debt Cancellation is Good for Development

It is widely recognised that debt relief is a highly effective resource transfer mechanism: debt relief can provide a much greater degree of predictability than other sources of development financing which allows governments to make the long- term investments necessary to achieve the MDGs. It supports country ownership since it allows countries to spend their own resources on the priorities they themselves have identified. It is non-cyclical, i.e. unlike aid which can decrease in times of economic downturn, debt relief is neutral. It also has low transaction costs and poses less administrative burden on recipient governments.

Research has also shown that partial debt relief, where granted, has been well spent and has proven to be a highly effective tool for poverty reduction. In Burkina Faso, HIPC debt relief has been spent on education (39%), health (33%) and rural road (28%). In Benin, 43% of HIPC savings went to education in 2002. In Malawi, HIPC resources have helped to train 3600 new teachers a year. ...

The Africa Commission reports that

  • In Benin, 54% of the money saved through debt relief has been spent on health including rural primary health care and HIV programmes.
  • In Tanzania, debt relief enabled the government to abolish primary school fees, leading to a 66% increase in attendance.
  • After Mozambique was granted debt relief, it was able to offer all children free immunisation.
  • In Uganda, debt relief led to 2.2 million people gaining access to clean water.


AfricaFocus Bulletin is an independent electronic publication providing reposted commentary and analysis on African issues, with a particular focus on U.S. and international policies. AfricaFocus Bulletin is edited by William Minter.

AfricaFocus Bulletin can be reached at Please write to this address to subscribe or unsubscribe to the bulletin, or to suggest material for inclusion. For more information about reposted material, please contact directly the original source mentioned. For a full archive and other resources, see