HIPC Initiative Consultation Meeting in UK

The Commonwealth Secretary General, Chief Anyaoku, opened a meeting in London to review the Heavily Indebted Poor Countries (HIPC) Initiative with a powerful call for “a complete write-off of external debt for some of the world's poorest countries.” The meeting brought together senior members of the IMF, World Bank, High Commissioners of Commonwealth countries, UK government officials and academics together with many Jubilee 2000 Coalition member organisations in the UK.

Chief Anyaoku said that recent proposals from the UK and German governments as well as G7 ministers of finance to improve the terms available showed there was “a real desire to improve the HIPC facility so that there can be a lasting exit from unsustainable debt for the poorest countries. Existing terms do not go far enough in tackling the problems. I notice a sense of desperation on the part of a number of highly indebted countries about the lack of tangible progress in easing the debt burden.”

There was broad consensus amongst the High Commissioners, NGOs, and academics present that considerable change needed to be made to the HIPC initiative. The 3 year plus 3 year time frame and conditionality was considered far too long and inappropriate. Many commentators argued that the capacity of a debtor government to service debt was directly linked to its budget, and therefore the HIPC process should include a fiscal measure in its sustainability analysis. Christian Aid and CAFOD argued that human development indicators had to play a central part if the initiative was to be successful.Matthew Martin from Debt Relief International made a presentation on how to measure debt sustainability, in which he showed that current measures were too high and were not delivering the debt relief necessary. He said that Uganda, which received HIPC assistance in April 1998 had returned to an unsustainable debt burden. There would need to be a retrospective assessment of countries that had already passed through the initiative if the Review leads to a reduction in the current sustainability measures.

Ann Pettifor, Director of Jubilee 2000 Coalition UK, focused on the process for determining levels of debt cancellation and presented a personal paper, which called for an independent Debt Review Body to determine and implement debt relief. The proposal sets out clearly how an independent process could determine the level of unpayable debt for each country on a case by case basis. A simple structure could ensure that resources released from debt relief were channelled in productive expenditure.

Bill Cash MP, Chair of the All-Party Parliamentary Group of Jubilee 2000, said that there was tremendous support for the Jubilee 2000 cause from Members of Parliament. He said that it was very important that the World Bank and the IMF to responded decisively to the strong demands for positive change.

The outcome of the HIPC review will not be known later in the year, but Jubilee 2000 campaign pressure, together with the increasing motivation and determination of G7 leaders such as the British Chancellor Gordon Brown, is forcing the IMF and World Bank to undertake a serious re-evaluation of the current failures of the initiative.