OPINION:
The International Monetary Fund is an agency of the United Nations that, in their own words, “works to achieve sustainable growth and prosperity … by supporting economic policies that promote financial stability and monetary cooperation… .”
I’m sure you’ll be amazed to learn that the United States is by far the largest contributor to the IMF—about $160 billion as of 2022, according to the Congressional Research Service. Despite being its largest contributor, the IMF has rarely operated with the interests of the US in mind.
Let me offer a recent, unhappy example.
The IMF has told a group of West African nations that share a common currency zone — Cameroon, Central African Republic, Chad, Republic of Congo, Equatorial Guinea, and Gabon — that loans and foreign aid may be compromised unless they take steps to bolster the amount of foreign currency they have in reserve.
So far, so good. Foreign currency reserves indicate a healthy financial system that is trusted by other nations and international businesses.
Unfortunately, one of the actions the IMF has tacitly accepted is the proposal by the nations to increase their foreign currency reserves is “repatriating” the funds set aside by oil companies for the future remediation of oil exploration and development sites. This cash is currently safely locked away and earmarked for future site clean-up and remediation.
The IMF hasn’t objected to the idea that all that money be sent to the countries in question right now. It doesn’t take much imagination to predict that once these governments possess the cash, it probably won’t be around 30 years from now when it’s needed to fund site restoration work. No matter where they are, governments just can’t resist the impulse to spend whatever money they have.
If companies don’t accept this scheme, they’ll be forced to deposit 150% of what they “owe” in local banks instead.
Why should we care? Few places in the world allow investor-owned oil and gas companies to compete for new business; most countries have nationalized their oil and gas industries. This obviously impairs American companies’ ability to make money, innovate, and help us remain the world’s energy leader.
Right now, the areas available for private companies to explore and produce the energy we need are limited to the western coast of Africa and the eastern coast of South America. It is probably not coincidental that about 40% of new oil and gas discovered in the world since 2020 has been in these places. If these resources are prevented from coming on line, it will be bad for American consumers.
The IMF’s silence has the potential to chase American companies away from some of the world’s largest remaining repositories of oil and gas, clearing the way for the slaving, genocidal regime in China to enter the market.
No doubt, the IMF thinks it’s helping these countries by looking the other way concerning their foreign currency reserves. A recent analysis conducted by S&P Global estimates that governments in the region stand to lose more than $100 billion if companies wind up leaving. It turns out that people and companies are unlikely to invest in places where their cash is routinely misdirected into government coffers.
The good news is that no one has done anything irreversibly stupid yet. The IMF still has the opportunity to do the right thing and clarify that funds to restore sites in the future don’t count as foreign currency reserves. If they did that, there would no doubt be some pain, and it might make the tenuous economic situations in these countries obvious.
That said, it is much better to know the truth about these nations now. The IMF is not doing them any favors by trying to hide the realities of the situation. Improvement can only come in the wake of honest assessments. Nor is the IMF doing the United States or its energy companies any favors by tacitly encouraging these countries to keep their books cooked.
The leaders of the African nations are meeting in Equatorial Guinea later this week to make final decisions about how best to proceed. Let’s hope they resist the easy path and instead do the right thing. Let’s also hope that the IMF remembers that it is supposed to be “supporting economic policies that promote financial stability.”
• Michael McKenna is a contributing editor at The Washington Times.
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