Indebted nations meet in Geneva to discuss debt relief

Twenty of the world's most heavily indebted countries called on creditors to deliver on their debt promises, after meeting in Geneva to discuss the progress of the World Bank and IMF's Heavily Indebted Poor Countries (HIPC) initiative (Wednesday 7 June). Since last year's G8 summit, where HIPC countries were promised $100 billion in debt cancellation, only 5 of the 40 have had reductions in their debt repayments due to extensive delays and conditions holding up the process.

The closed-door meeting, organised by the Swiss government was attended by Finance Ministers from Angola, Benin, Burkina Faso, Bolivia, Cameroon, Central African Republic, Congo Brazzaville, Equatorial Guinea, Ethiopia, Gambia, Guinea-Bissau, Honduras, Mauritania, Mozambique, Nicaragua, Niger, Sao Tome and Principe, Tanzania, Uganda and Zambia, along with the IMF and World Bank, and ODA officials from creditor countries.

Swiss Economics Minister Pascal Couchepin, opened the meeting by warning against overburdening heavily indebted countries with conditions in return for help through debt relief: “The provision of debt relief must be linked to performance but in a realistic way. It can be counterproductive to overburden HIPC countries with a long list of conditions covering all aspects of economic policy and structural reforms.  Conditionality should in our view focus on a limited set of key measures which can be monitored in a satisfactory manner.”

HIPC Finance Ministers said they were pleased by moves to write off debts by international creditors, but that indebted governments needed to retain more control over how resources were spent. They congratulated creditors for contributing to the HIPC trust fund (to cover the costs of debt cancellation owed to the IMF, World Bank and other regional development banks) but said that not all countries have fulfilled their commitments. The US has so far contributed nothing to the trust fund, with Congress failing to provide the dollars promised last year by President Clinton.

The day after the meeting, Nordic countries announced they would cancel US$101 million of debt owed by some of the world's poorest countries as they move through the HIPC process.