JUBILEE 2000 COALITION BRIEFING: The British Government's debt initiative Jubilee 2000 Coalition

December 2000

“ Because poverty is so great and the need so urgent, neither you nor I want the richest countries to benefit any more from the debts of these poorest countries. So I can say to you—and to all 41 HIPC countries on behalf of the British Government—I will renounce our right to receive any benefit from the historic debt owed by all the 41 most indebted countries.” [1]

Chancellor Gordon Brown, December 2000

“The National Coalition of Mali/Jubilee 2000 has learnt and much appreciated the gesture of the British government which consists of abandoning the debt services of the 41 poorest countries. We do appreciate this gesture but we say that it's not enough because the total and immediate debt cancellation remains our main objective. So we call on the UK Jubilee 2000 to continue fighting to achieve our objective with the national coalition of Mali. The fight continues.” [2]

Sekou Diarra, Mali Jubilee 2000, December 2000

1. What are the details of the new British Government debt initiative?

The British Chancellor, Gordon Brown, announced on 2nd December 2000 that the British government would either cancel or hold in trust all debt payments to Britain from the 41 Heavily Indebted Poor Countries. The total owed to Britain by the 41 countries at the end of March 2000 was £2 billion [3]. The new initiative applies to those countries which have not already reached decision point—when they first receive some relief on debt payments —in the Heavily Indebted Poor Countries initiative. For these countries, which do not have poverty reduction strategies in place, any payments made to Britain after December 1st 2000 on existing debt will be kept in a trust fund and returned to the country when it can be shown that the money will be used for poverty reduction.

2. How does it build on the existing initiative launched last year?

The British Government announced in December 1999 that it would cancel all debt owed to it for countries that reached decision point in the Heavily Indebted Poor Countries Initiative. By early December 2000 12 countries were in such a position, and the World Bank and IMF are hoping to have at least 20 countries at this point by the end of 2000. The 12 countries that have reached decision point and therefore have received total cancellation of their debt by Britain are Bolivia, Uganda, Mauritania, Tanzania, Mozambique, Senegal, Honduras, Burkina Faso, Benin, Mali, Cameroon and Guyana. Between them these countries owed £368 million to Britain. The next 10 countries in line to reach decision point (at least eight of them in 2000) are Gambia, Guinea, Guinea-Bissau, Madagascar, Malawi, Nicaragua, Niger, Rwanda, Sao Tome and Principe and Zambia. Of these only Guinea, Madagascar, Malawi, Nicaragua, Niger and Zambia have debts to the UK. They will receive cancellation of their debts under the original December 1999 initiative, a total of £266 million, when they reach decision point at the end of December 2000 or in January 2001.

3. Which countries will benefit from the new initiative?

The countries that will benefit from the December 2000 initiative are those which are on the HIPC list, have debts to Britain, but are not yet as advanced to decision point in the HIPC process. This is generally because the country will not have established the necessary three years track record of structural adjustment, and fulfilled all the conditions required by the IMF and World Bank before debt relief is delivered. Several of the countries are affected by conflict. There are 19 countries that are not among the early cases for HIPC debt relief. They are Angola, Burundi, Central African Republic, Chad, Congo Republic, Democratic Republic of Congo, Côte d'Ivoire, Ethiopia, Ghana, Kenya, Lao PDR, Liberia, Myanmar, Sierra Leone, Somalia, Sudan, Togo, Vietnam, and Yemen. Of these, Burundi, Chad, Lao PDR, and Myanmar have no debts to the UK. The rest—15 countries in all—have debts of £885 million to Britain. These will not be cancelled immediately, but any payments made to service these debts will be placed in a trust fund and returned to the country concerned, once the British government is convinced that an effective policy of poverty reduction is in place. These 15 countries paid a total of £15.6 million to Britain in 1999-2000. The lion's share of this was from Kenya, which paid £13.2 million. The figures in the annex show what the cost is to the British Exchequer, and what benefit will eventually accrue to the people of these countries when the payments are returned.

4. Which countries are left out?

Jubilee 2000 has consistently called for countries beyond the official HIPC list of 41 to be included. At least 52 countries are in urgent need of debt cancellation, and amongst those in debt to Britain that will not benefit from the initiative of the British government are Jamaica, Morocco, Nigeria, Peru, the Philippines and Zimbabwe. Nigeria is a striking omission, as Britain is the largest creditor country for Nigeria. Nigeria owes Britain £3.7 billion, almost twice the total owed to Britain by all the 41 HIPCs. Nigeria was originally on the HIPC list, but was discreetly removed in August 1998.

5. What is Jubilee 2000's reaction?

Jubilee 2000 welcomes the latest initiative from the British government. It is another step towards the giving a debt free start to the people of the poorest countries, and can be used to prompt other creditors into further action. However, it should be kept in context. The total debt of the 41 HIPCs is about $213 billion, or £140 billion. The British initiatives, both from December 1999 and December 2000 cover only £2 billion, or under 1% of the total debt of these countries. The total debt service paid each year by the 41 countries is still in the region of $9 billion of which only $42 million is paid to the UK. There is clearly much more to be done, both from other bilateral creditors and most importantly the international financial institutions such as the IMF and World Bank. The reaction from Jubilee 2000 in Mali effectively captures the mood of the international movement. “We do appreciate this gesture but we say that it's not enough because the total and immediate debt cancellation remains our main objective. So we call on the UK Jubilee 2000 to continue fighting to achieve our objective with the national coalition of Mali. The fight continues.”

ANNEX

The breakdown of poor country debt to the UK is listed in the table overleaf. This does not include so-called post cut off date debt [4], which is about £400 million and mostly owed by Ghana (£279 million) and Vietnam (£52 million). The table lists the 19 countries which have yet to receive any HIPC relief, the 12 countries which have reached decision point by end of November 2000, and then the 10 countries expected to reach decision point in December 2000 or early 2001.

Year 2000       ECGD DFID Total
  ECGD debt DFID debt Total debt to Payment Payment payment to
Country £ million £ million UK govt. £m. £ million £ million UK govt. £m.
Angola 113.5 0 113.5 0 0 0.0
Burundi 0 0 0.0 0 0 0.0
Central African Republic 0.4 0.0 0.4 0 0 0.0
Chad 0 0 0.0 0 0 0.0
Congo, Dem. Rep. 160.1 0 160.1 0 0 0.0
Congo, Rep. 145.1 0 145.1 0 0 0.0
Cote d'Ivoire 25.1 1.9 27.0 0.1 0 0.1
Ethiopia 11.6 0 11.6 0.5 0 0.5
Ghana 0.7 0 0.7 1.4 0 1.4
Kenya 24.4 0 24.4 13.2 0 13.2
Lao PDR 0 0 0.0 0 0 0.0
Liberia 15.8 0 15.8 0 0 0.0
Myanmar 0 0 0.0 0 0 0.0
Sierra Leone 3.6 0 3.6 0 0 0.0
Somalia 28.8 0 28.8 0 0 0.0
Sudan 323.6 0 323.6 0 0 0.0
Togo 16.4 0 16.4 0 0 0.0
Vietnam 10.4 0 10.4 0.3 0 0.3
Yemen 3.1 0 3.1 0.1 0 0.1
Total 19 countries 882.60 1.90 884.50 15.60 0.00 15.60
             
Benin 2.7 0 2.7 0.2 0 0.2
Bolivia 11 0 11.0 0.8 0 0.8
Burkina Faso 1 0 1.0 0.1 0 0.1
Cameroon 68 0 68.0 1.9 0 1.9
Guyana 33.4 27.345 60.7 2.1 0 2.1
Honduras 0 1.537 1.5 0 0 0.0
Mali 4.1 0 4.1 0.2 0 0.2
Mauritania 6.9 0 6.9 0 0 0.0
Mozambique 87.9 2.158 90.1 0.1 0 0.1
Senegal 1.5 0.216 1.7 0 0 0.0
Tanzania 115.1 0 115.1 4.6 0 4.6
Uganda 5.6 0 5.6 0.6 0 0.6
Total 12 countries 337 31 368 11 0 11
             
Gambia 0 0 0.0 0 0 0.0
Guinea 5.1 0 5.1 0.2 0 0.2
Guinea-Bissau 0 0 0.0 0 0 0.0
Madagascar 26.9 0 26.9 0.5 0 0.5
Malawi 0.6 0.228 0.8 0.1 0 0.1
Nicaragua 1 0.398 1.4 0 0 0.0
Niger 11.1 0 11.1 0.07 0 0.1
Rwanda 0 0 0.0 0 0 0.0
Sao Tome & Principe 0 0 0.0 0 0 0.0
235.4 30.77 266.2 2 0 2.0
Total 10 countries 280 31 311 3 0 3
             
Total 41 countries 1500 65 1564 29 0 29

source: Export Credits Guarantee Department, DFID.

Prepared by Jubilee 2000 Coalition UK, 5th December 2000. For more information please phone +44 (0) 20 4077447 ext 265. or go to www.jubilee2000uk.org

Footnotes

[1] Speaking at a Jubilee 2000 rally in central London, 2nd December 2000.

[2] Responding to the UK government announcement in an e-mail message to Jubilee 2000 UK.

[3] This is made up of £1.6 billion in `pre-cut-off date' debt (incurred before the point at which the country is first assessed for debt relief), and £400 million in post cut off date debt.

[4] The “cut off date” is the date that dictates which debt is eligible under Paris Club rules for debt relief.


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