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debt relief programme moving fast enough: IMF 7 June 2001 Sapa-INet-Bridge The International Monetary Fund (IMF) had "moved fast" on implementing the World Bank's debt relief prgram for heavily indebted poor countries (HIPC), despite what some African leaders have had to say on the subject, IMF First Deputy Managing Director Stanley Fischer said on Thursday. Speaking at the World Economic Forum's (WEF's) Southern Africa Economic Summit, Fischer said $20 billion, or more than one-third, of the present value of debt of 23 countries getting relief in terms of the HIPC program had already been written down. This had seen debt servicing costs fall from 26% of budget to around 13%. He said total debt forgiveness was not an option as this would signal that countries that borrowed now would not have to pay funds back. Savings were being used in health, education and infrastructure spending and for the provision of social safety nets. Fischer said seven of the 13 countries that would qualify for debt relief in terms of the HIPC program would join this year, while many of the remaining countries were in conflict situations and would join the programme once these were resolved. According to the IMF website, if combined with traditional debt relief and likely additional bilateral debt forgiveness, the HIPC Initiative will reduce the debt stock of participating countries by almost two-thirds from $53 billion in net present value terms to roughly $20 billion. Speaking to parliament at end May, South African President Thabo Mbeki said he was concerned about the slow pace of debt relief for the world's poorest countries and that the process countries had to follow to qualify for HIPC debt relief was too slow. The G8 industrialised countries confirmed their commitment to debt relief at their Okinawa summit held in July 2000, after meeting the presidents' of Algeria, Nigeria and South Africa, and the prime minister of Thailand. Fischer said the IMF would be willing to start lending to Zimbabwe again if action was taken to regularize land reform and macroeconomic stability was strengthened. He said the IMF also did not lend to countries that were in arrears. "If problems can be solved we will be there," he said adding that he hoped the crisis being faced by Zimbabwe would be resolved "very quickly." He said any solution to Zimbabwe's economic crisis needed to be sustainable. In an earlier press conference, Zimbabwean Finance Minister Simba Makoni committed his country to meeting all its debt obligations, but he called on the international business and financial community to help return Zimbabwe to a state of normality so that it could generate the required foreign currency. Fischer said that South Africa's financial services sector was very strong but that there were still some structural impediments to growth. Labor flexibility was a long-standing issue, but real labor costs had been mitigated somewhat by the depreciation of the rand. Fischer said the government faced a "difficult balancing act" of trying to increase labor flexibility while dealing with labor's "valid concerns" about job safety and job security. He said real progress was starting to be seen with privatization. He said it was realistic to expect privatization to move more slowly in a democracy than in an autocracy but that decisions made by the former "stuck." Overall, Fischer said, structural impediments were being dealt with. http://www.sapa.org.za |
