IMF agrees to HIPC review

 

The IMF has agreed to a new comprehensive review of the Heavily Indebted Poor Countries (HIPC) Initiative that will take place in 1999. Gordon Brown, the British Chancellor, first raised this idea in September 1998 at the annual meetings of the World Bank and IMF. The World Bank supported the idea from the outset, but the IMF proved extremely reluctant.

In a meeting held with NGOs and multilateral institution representatives, the IMF's Tony Boote pointedly reminded Gordon Brown that not all creditors were backing his call for the review. However, the change of the government in Germany together with the increased calls for substantive action following the natural disasters in Central America, have finally led to the IMF agreeing. Michel Camdessus, the IMF's Managing Director, confirmed the position this week.

This is as close as the IMF ever comes to admitting that it is not doing enough to deliver debt relief to the heavily indebted country's of the developing world. The new review will follow only months after the previous one finished, and it is therefore a de facto admission that the previous review was insufficient. Gordon Brown said that he intends that the review will consider the debt sustainability ratios. These have been widely criticised by debtor governments and NGOs as being too high, as they give minimal debt relief.

The Review will be considered by the World Bank and IMF boards at the 1999 Annual Meetings. It will also include an independent external evaluator.