Global Policy Forum

By Simon Barber

Washington - Steps agreed last year to speed up debt relief for the world's poorest countries were not working and needed be revised, Finance Minister Trevor Manuel told the International Monetary Fund's key policy body yesterday. In a tough speech to the fund's international monetary and financial committee, Manuel said the promise implicit in the committee's decision last September to beef up and expand the highly indebted poor country initiative looked as if it had been "broken".

"We resolved that debt relief would be deeper, faster and broader", and this was not happening, Manuel complained, speaking on behalf of the 21-member African constituency with which SA pools its vote in the IMF.

Several members of the group, including Nigeria, Botswana and SA, were all the more disappointed because they had agreed to make "significant contributions" to the IMF trust fund set up to finance relief that was not delivered.

Manuel's assertive presentation came as he and other developing country ministers pressed for reforms in the fund's voting system - tilted to give effective veto power to the US and Europe - to give poorer countries a greater say in fund and World Bank decisions. The fund agreed last year to increase the amount of debt relief for countries that qualified for relief under the original debt relief programme and to increase the number of countries eligible for relief to about 40. The fund also resolved to ask qualifying countries to demonstrate how they planned to use the proceeds of relief to fight poverty.

Only one country, Uganda which is in line for extra "retroactive" relief, had achieved the "completion point" after which assistance can be fully disbursed, even though all the other countries in the same category, including Tanzania, Mozambique and Mauritania, had previously passed the stringent test for eligibility and had reached their original "completion points".

For other candidates, the objective of three-quarters achieving relief by the end of this year now appeared "almost unreachable", Manuel said. "The initiative has become a prolonged, resource-intensive and overcomplex process." Part of the problem was that to qualify for relief, countries now had to produce detailed "poverty reduction strategy papers" in consultation with their civil societies, and then implement the programmes contained in these papers for at least a year before receiving relief.

Manuel noted that his constituency had raised "severe concerns" about this requirement when it was established last year, and it had now become a "significant obstacle to faster debt relief and is damaging the integrity of the" debt relief programme.

To require countries to implement poverty reduction strategies before they had the resources to do so was "to put the cart before the horse". To obtain relief from the IMF and World Bank, the principal creditors in most instances, countries also had to secure similar levels of debt reduction from bilateral lenders, including other developing countries themselves facing heavy debt burdens. This was "both immoral and unjustifiable", Manuel said.

FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.