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CREDITORS FAILING THE WORLD'S POOR, SAY JUBILEE CAMPAIGNERS 

How much should have been cancelled? 

1. At the G7 summit in Cologne, G7 leaders committed themselves to cancelling $100bn of the debts of the 42 poor countries included within the World Bank and IMF's Heavily Indebted Poor Countries (HIPC) initiative. 

2. Of this total, $50bn was to be provided through the HIPC initiative itself; $30bn from 'traditional' debt cancellation such as that provided through the Paris Club; and $20bn from cancellation of aid debts by bilateral creditor countries.

3. Subsequently, all major industrialised countries announced that they would be providing 100% debt cancellation of the bilateral debts owed to them by the poorest countries, bringing the total relief up to $110bn. 

4. According to the initial schedule, 19 out of the 38 countries deemed to need debt relief under the HIPC initiative should have received substantial debt cancellation by the end of 2002. Total debt cancellation for these countries, and traditional relief for other countries, should by now have amounted to $68bn. 

How much has actually been cancelled? 

5. To date, only 6 countries have received any cancellation in their stock of debts under the enhanced HIPC initiative, receiving total relief of $17bn. A further $17bn has been cancelled through so-called 'traditional' mechanisms for debt cancellation, while approximately $1.5bn has been cancelled under the original HIPC initiative (HIPC I.)

6. It should be noted that the relief provided under traditional debt cancellation mechanisms would probably have occurred even in the absence of the Cologne commitment. 

Are debts now sustainable? 

7. Analysis by Jubilee Research has shown that at least 13 out of the 20 countries in the pipeline for debt cancellation will not have their debts brought down to levels deemed 'sustainable' even according to the, already flawed, HIPC criteria. 

8. Even Uganda, star pupil of the IMF and World Bank for more than a decade, has been sorely failed by HIPC. In the first year of the new millennium, insufficient debt relief and the failure of some of her creditors to pull their weight pushed Uganda's debt burden to almost 220% of her exports - well above the 150% threshold for sustainability under HIPC. 

9. Although creditors have agreed to provide an additional $1bn in 'topping up' of debt relief, this is being used by multilateral creditors including the World Bank and IMF to reduce their own contribution, leaving countries no better off. 

10. Our research has also shown that the 42 HIPC countries as a whole will need total debt cancellation if they are to have any hope of meeting the 2015 Millennium Development Goals. 

Is debt relief working? 

11. Yes. Debt service for these countries as a whole has fallen by almost $1bn a year since 2000. 

12. Jubilee Research has shown[1] that debt relief is serving to increase spending on health and education in the countries that have started to receive relief. In 10 African countries, all of which had started to receive some debt service relief by the end of 2000, we found that: 

  • Education spending had risen from only $929m in 1998, or less than the amount spent on debt service, to $1306m in 2002, more than twice the amount spent on debt service;
  • Health spending had risen from $466m, or 50% of debt service spending, to $796m, or one third more than spending on debt service;
  • Over the same period there had been no increase in spending on the military. 

Click here for the Press release

[1] See ‘Relief Works – African proposals for debt cancellation and why debt relief works’ by Jubilee Research at NEF, available at http://www.jubileeresearch.org/analysis/reports/reliefworks.pdf