Structural Adjustment Policies are economic policies which countries must follow in order to qualify for new World Bank and International Monetary Fund (IMF) loans and help them make debt repayments on the older debts owed to commercial banks, governments and the World Bank. 

THE BANKSTERS TAKE OVER AND DICTATE HOW THE COUNTRY IS RUN

….Balancing national budgets can be done by raising taxes, which the IMF frowns upon, or by cutting government spending, which it definitely recommends. As a result, SAPs often result in deep cuts in programmes like education, health and social care, and the removal of subsidies designed to control the price of basics such as food and milk. So SAPs hurt the poor most, because they depend heavily on these services and subsidies.

SAPs encourage countries to focus on the production and export of primary commodities such as cocoa and coffee to earn foreign exchange. But these commodities have notoriously erratic prices subject to the whims of global markets which can depress prices just when countries have invested in these so-called ‘cash crops’.

By devaluing the currency and simultaneously removing price controls, the immediate effect of a SAP is generally to hike prices up three or four times, increasing poverty to such an extent that riots are a frequent result….

The World Bank In United States
As the World Bank Group’s largest shareholder, the United States has a long history of supporting the Bank Group’s mission and addressing development challenges of vital importance through its support of Bank Group programs.

The US TAX PAYER IS THE BIGGEST FUNDER OF THE IMF.

Look at the IMF numbers (Millions of SDRs)

United States 82,994.2

China 30,482.9

Germany 26,634.4

United Kingdom 20,155.1 (UK and France pay the exact amount)

France 20,155.1

Russian Federation 12,903.7

Canada 11,023.9

https://www.imf.org/external/np/sec/memdir/members.aspx

http://www.congressionalresearch.com/RS20413/document.php

Imf and World Bank: U.s. Contributions and Agency Budgets

Finance Corporation (IFC), the World Bank’s private sector finance affiliate. Since its inception in 1956, the United States has subscribed $569.4 million (all paid-in) to the IFC. It has the largest single vote (23.8%), a total almost as great as the combined vote of the four countries with the next largest votes.

….

“The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries’ official reserves. As of March 2016, 204.1 billion SDRs (equivalent to about $285 billion) had been created and allocated to members. SDRs can be exchanged for freely usable currencies. The value of the SDR is based on a basket of five major currencies—the US dollar, the euro, the Chinese renminbi (RMB), the Japanese yen, and the British pound sterling.”

http://www.imf.org/en/About/Factsheets/Sheets/2016/08/01/14/51/Special-Drawing-Right-SDR

September 30 2002: ‘Sovereign bankruptcy’ plan wins US backing

The world’s top financial policy makers this weekend launched a drive for new rules for “sovereign bankruptcy” to head off national debt crises and to handle them more smoothly when they did occur. In the most significant achievement of three days of discussions at the International Monetary Fund and World Bank annual meetings, IMF staff have been told to come up with detailed proposals by next spring. This time the scheme has the unequivocal support of the United States, which previously had been sceptical.

There had to be “a clear and predictable process for countries that reach a position in which they cannot sustain and service their debt burden”, Paul O’Neill, the US Treasury Secretary, said in his speech to the IMF governing board yesterday. The aim was “not to make defaults easier or more likely, but simply to make a restructuring more orderly and predictable should it occur”….

From my old notes:

2004 The United Nations Department of Economic and Social Affairs, in cooperation with the International Monetary Fund, the World Bank and the United Nations Conference on Trade and Development, is holding a series of multi-stakeholder meetings on the issue of sovereign debt. http://www0.gsb.columbia.edu/ipd/programs/program.cfm?prid=15&ptid=2

How Should a Sovereign Bankruptcy Regime Be Structured 2004 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=665272

Governance of Globalization Program and Corporate Governance Program http://www0.gsb.columbia.edu/ipd/search/searchresults.cfm?search=basic&keyword=Sovereign%20bankruptcy%202008&sort=type&iyid=0&ptid=0&prid=

Bankers treated postrevolutionary Mexico as a hybrid, that is, as a case of both developmental and revenue default, in Fishlow s taxonomy, in the interest of protecting the rights of bondholders generally. Their approach led them to reject the argument of US ambassador to Mexico (and former Morgan partner), Dwight W. Morrow, that a government could be financially insolvent. Bankers acted similarly during the debt crisis of the 1980s. http://econpapers.repec.org/article/cupfihrev/v_3a13_3ay_3a2006_3ai_3a02_3ap_3a197-215_5f00.htm

Far more serious friction is caused by the bankruptcy of foreign governments. Only in exceptional instances does it take the form of complete repudiation of debts; of this Russia is the classic example. 

More often a government withholds for a limited period interest due on its obligations or funds it into another interest bearing obligation; sometimes it resorts to a forced conversion of its debt at a lower interest rate, a reduction of interest which may be achieved almost as effectively by the imposition of a coupon tax. Where government bonds held by foreign investors are in terms of the domestic currency, a generous inflation may materially reduce the public debt without an acknowledged breach of the government’s legal obligations. Defaulting governments can rarely be sued in their own courts; and even if judgment were given against them, foreign creditors could hardly make use of it as long as they could not sell government property or attach government revenues. Although governments scarcely ever assume responsibility for the investments of their nationals in foreign countries they are often made to intervene when frictions connected with such investments lead to loss of life or to “denial of justice.” In the case of comparatively weak states creditor countries have often employed naval demonstrations, occupation of ports or some form of blockade; even since the general recognition of the Calvo and Drago doctrines governments have used diplomatic pres- sure and occasionally direct military intervention. In the case of older and stronger states such measures are not available. The foreign creditor is then protected merely by the hesitation of the government to impair its credit standing. While the capital markets of the world are not thoroughly organized and while the various defense associations of foreign bondholders do not cooperate in every case, few governments are able completely to rid themselves of their old obligations; when they need new loans they must settle with their old creditors, although Russia seems to have succeeded in getting camouflaged import credits without compensating its old creditors. 

The dominant fact, lost to a superficial view in the mazes of international finance, is that wealth and especially moneyed wealth is not merely a source of income but an embodiment of economic power. In national affairs the money power is under the sway of the national government, although in some cases it openly or secretly controls the government. In international affairs political and financial power are in separate hands; hence the variety of possible combinations, which ranges from sincere cooperation to bitter animosity. 

Theoretically the foreign money lenders,…
While foreign investors are interested mainly in the security of their claims, the governments of creditor countries have often used the financial power vested in their money markets for political purposes. Loans were offered and in some cases even obtruded on less organized nations for military or political concessions. Financial control was resorted to not merely for the purpose of rehabilitating the country and securing the creditors’ rights but for getting control over its administration without having openly to assume political responsibility. In many cases there has been a quick transition from a loan made to a native ruler, originating in the wasteful splendor of his court and in the greed of an unscrupulous financier, to reorganization by a creditors’ council, which in its turn has led to a protectorate that has easily developed into control equivalent to political annexation. In countries where the rivalry of the various nations made direct annexation virtually impossible, a creditors’ council sometimes provided a useful form of international financial administration, which guaranteed financial security and a certain amount of economic progress without political control. International finance was thus made to provide a capitalistic substitute for political colonization and territorial imperialism. 

In some cases international finance enabled native governments to develop the resources of their countries and greatly to improve their economic status. For the promise of a share of profits foreign financial interests were allowed to form corporations for the exploitation of railways, mines, oil fields, plantations and public utility services. Such corporations were sometimes strong enough to control the native governments. The De Beers company in Cape Colony in South Africa was for a long time in this position; and the connections of foreign finance with the Dfaz regime in Mexico were intimate and unbreakable. While the profits of the foreign concession holders were accumulated in many cases at the expense of the native workers, the upper and the middle class of the backward countries participated in this newly created