We joined a Global Call for IMF to Reform Regressive Surcharge Policies
This Friday, 11 October, the International Monetary Fund (IMF) is expected to announce reforms to its controversial policy on charges and surcharges, which imposes extra fees on countries whose debts exceed specific thresholds. In response, a coalition of experts, including the Global Initiative for Economic, Social, and Cultural Rights (GI-ESCR), has signed an open letter urging the IMF to implement meaningful reforms to this policy, particularly on surcharges.
The letter, spearheaded by Nobel laureate Professor Joseph Stiglitz and supported by various civil society organisations, emphasises that IMF surcharges are regressive and procyclical. These fees place a disproportionate burden on low- and middle-income countries, forcing them to pay higher rates during times of financial crisis, when they should be investing in recovery. Research shows that surcharges exacerbate financial instability by increasing borrowing costs and hindering access to international markets.
Advocates argue that the surcharges inflate the total interest rate imposed by the IMF to nearly 8%, draining critical resources from countries already struggling with debt. The letter highlights the estimated $2 billion in surcharge payments that countries are expected to pay annually over the next five years—funds that could otherwise be used for vital public services like healthcare, education, and climate action.
Despite growing criticism, there are concerns that the IMF is only considering minor adjustments to its surcharge policy rather than addressing its fundamental flaws. The letter warns that such half-measures will do little to promote global financial stability. If the current system persists, confidence in the IMF as a steward of financial stability could erode, especially in the most vulnerable countries.
Alongside other signatories, we call for the IMF to adopt more equitable policies that allow indebted countries to recover and thrive, ensuring that every dollar spent is used to benefit their populations rather than service unsustainable debt. The coalition’s message is clear: real reform is necessary to avoid deepening economic crises and to promote a more just and stable global financial system.
You can read the full letter published by the Initiative for Policy Dialogue here.