By Jean-Louis Doublet
Agence France PresseApril 25, 2001
The World Bank and the International Monetary Fund, whose policymakers meet here later this week, are coming under pressure from non-governmental organizations (NGOs) to cancel once and for all the debts owed them by the world's poorest nations. The Bank and the Fund, however, are committed to reducing - rather than canceling - the debt burden carried by impoverished countries that adhere to IMF-backed macroeconomic reforms and commit themselves to anti-poverty measures.
Under the Heavily Indebted Poor Countries Initiative (HIPC), launched by the two institutions two years ago, 22 nations are now eligible for debt relief totaling $34 billion. Thirteen countries are waiting to be approved for the program. World Bank officials insist they have met their debt reduction goals and are looking for recognition of that accomplishment by the NGOs, notably Oxfam International.
"Two or three years ago, Oxfam ... published a list of three or four points that in their view would be required to be met in order for the debt relief initiative to really succeed," Jacob Kolster, the World Bank's HIPC program manager, told a briefing here. "As it actually turns out today, all those points have been met as far as the 22 countries that have been delivered for decision point today. Now, Oxfam has moved the goalpost since. We're still trying to catch up with the new goalpost but we have met the old one, which was set out two years ago."
At Oxfam, policy advisor Oliver Buston maintained that "of the 22 countries, 16 are actually spending more for the service of their debt than on health programs". He said IMF and World Bank debt reduction assumptions "are based on wild growth estimates of five to six percent on a yearly average that ignore Aids and the economic slowdown".
Oxfam has urged World Bank and IMF policymakers meeting here to back the 100 percent cancellation of debts owed their institutions by HIPC countries that have shown they can use the savings to fight poverty and where a 10 percent debt service-to-revenue ceiling means that not enough resources can be released to raise living standards.
Another NGO, Drop the Debt, earlier this month released a report it said showed that the Bank and the Fund could forgive all the debt owed them by the poorest countries and still have money left over to function normally. Debt cancellation is also to be the key demand at a demonstration here on Sunday by the Mobilization for Global Justice coalition, which maintains that thousands of children die every day - 19 000 a day in Africa alone - in countries where loan repayments to wealthy creditors take priority over health care, education and food security.
The rally is expected to be the principal action by anti-globalization activists, whose numbers are not seen as reaching those of last year when thousands of demonstrators managed to disrupt the meetings of the Bank and the Fund. The main target for anti-globalization activists is now the much more extensive September gatherings held here, attended not only by policy-setting bodies but by delegations from each of the 183 IMF member countries as well.
At a recent briefing, Masood Ahmed, the World Bank's deputy director for policy development and review, argued that countries benefiting from the HIPC initiative have had their debt burdens lowered to the average level of obligations carried by other poor countries. "So going further and canceling the debt of the HIPC countries raises problems of equity vis-í -vis other poor countries who have the same levels of debt as HIPC countries ... but who wouldn't be covered," he said.
Bank officials have also challenged the notion that the institution can - with no ill effect - simply write off the debts owed it. Spokesperson Caroline Anstey pointed to the World Bank's concessional lending arm, the International Development Association (IDA), which makes zero interest loans to the world's neediest nations - those that had a per capita income in 1999 of less than $885.
Nearly half of new IDA commitments each year, about $6.5 billion, are financed from loan repayments and investment, she said, adding that if the obligations were cancelled the ability of the Bank to continue making interest-free loans would be undermined.
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