Three countries receive debt relief but others are left waiting

After long delays decisions on the level of debt relief to be delivered to Uganda, Bolivia and Mauritania under the G8 Cologne Summit, agreements were finally made last week. For the three countries involved this is a significant step forward as money released from debt service can be released into spending on health and education. However Jubilee 2000's research reveals that Uganda, Mauritania and Bolivia can expect an average reduction of only 35% in their debt repayments. Mauritania, with an adult illiteracy rate of 62%, will still be spending significantly more in debt service than on education. Bolivia will still be paying $240 million per year, on average – about three quarters of what it spends on health. Jubilee 2000 has also raised serious concerns about the countries who have been delayed and others who will receive nothing at all. Guyana's debt relief has been postponed by the creditors, and heavily indebted poor countries such as Nigeria are being excluded on technical grounds.

The case of Guyana in particular exposes International Monetary Fund inconsistencies which threaten to derail even the limited debt relief available. Guyana has already completed the Heavily Indebted Poor Countries (HIPC) initiative once, and was expecting to receive extra relief following the Cologne G7 Summit in June 1999. But in a scandalous series of events, Guyana will not be receiving the urgently needed extra-relief as promised. The reason is that the government has failed to keep to budgetary targets set by the IMF, contravening the rules of IMF conditionality. Yet the reason for the budget deficit was a pay increase given to public sector workers following a strike. The strike negotiations and settlement was backed by the IMF.

The Guyanese High Commissioner for the UK, Laleshwar Singh, commented: “The recent history in Guyana reveals the contradictions within the process of qualification for debt relief. Guyana patiently followed the rules, and now we are not being rewarded for doing so. From the point of view of the Guyanese people, stalling the process is not about calendar dates – the debt burden is severe and constrains the ability of the Government to act on extremely urgent domestic priorities such as education, health, water, physical infrastructure and public administration capacity. In short, without new debt relief commitments, the economy runs the risk of stagnation.”

Nigeria on the other hand is not even being considered for debt relief, despite its high levels of poverty and indebtedness. Nigeria was on the initial World Bank Highly Indebted Poor Country list but has been removed. One of Britain's largest debtors, Nigeria will not receive any benefit from under Gordon Brown's 100% promise, which only applies to HIPC countries. The elected government is struggling to establish economic and social stability under an impossible burden of debt. Jubilee 2000 argues that creditor countries, who lent freely to previous military regimes, have a responsibility to free Nigeria from the debt crisis currently constraining development.

Ann Pettifor, director of Jubilee 2000 said:

“We are really glad that countries promised relief back in June are finally getting some debt cancellation. Guyana and Nigeria were defined by the IMF as eligible for relief but have been passed over. This shows that the current creditor-controlled process is random and arbitrary."

Full briefing on the first test case of the Cologne HIPC initiative - what it delivered and its weaknesses.