| World Bank admits HIPC 'insufficient' to beat poverty |  |
| World Bank admits HIPC 'insufficient' to beat poverty | |
"HIPC Initiative debt relief alone would be insufficient to reach the overarching International Development Goal of halving the proportion of people living in absolute poverty by 2015," admitted the World Bank's Development Committee at its meeting in Washington 28 April.
The ministers in the Development Committee called for "HIPC Initiative debt relief to be broader, deeper and faster", but they wanted others to pay the cost.
The inadequacy of HIPC – the Heavily Indebted Poor Countries Initiative- was widely recognised at the Spring meetings of the World Bank and IMF in Washington. But there was disagreement as to what should be done. The Intergovernmental Group of 24, a group of finance ministers linked to the IMF, which also met in Washington on 26 April, put the stress on “finding sufficient alternative financing mechanisms to provide additional relief”. The stress on "mechanisms" is a demand for wider thinking as to how to account for debt cancellation.
But the Development Committee followed a more conventional line, calling for "a broad-based effort to find appropriate and equitable financing solutions. In particular, there is a need for increased bilateral contributions—with fair burden sharing—to the HIPC Trust Fund". They also seemed reluctant to extend debt relief too much further, and instead called on industrialised countries to provide more aid and open their countries to poor country exports.
Perhaps the biggest conflict of the week was over the IMF and United States continuing to demand that debt relief be linked to rigid IMF ESAF structural adjustment programmes, which are widely criticised for increasing poverty. The World Bank is clearly trying to distance itself from those policies. In his press conference, the World Bank vice president and chief economist, Joseph Stiglitz, renewed his attack on ESAF policies when he stressed the need to “be more cautious of programs that promote growth in ways that are not sustainable or which `save' the economy, or at least the exchange rate, but at the cost of increased poverty, interrupted education, or declining life expectancies.”
The Development Committee underlined this when it said: "Ministers reiterated the importance of ensuring a clear link between debt relief and the goals of sustainable development and poverty reduction and looked forward to the results of ongoing consultations in this area. >From the outset, the underlying reform programs should have an integral pro-poor growth focus."
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