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HIPC Finance Ministers call for faster, deeper debt relief 1st October 2002 By Romilly Greenhill During the Annual Meetings of the IMF and World Bank in Washington DC last weekend, HIPC Ministers expressed their frustrations with the slow pace of implementation of the HIPC initiative and called for faster, deeper relief. At a press conference held on 28th September 2002, Mrs Luisa Diogo, Minister of Finance from Mozambique, and Mr Ali Badjo Gamzhie, the Minister of Finance and Economy in Niger, spoke on behalf of the HIPC Ministerial Network, which includes Finance Ministers from 34 out of the 42 HIPC countries . The HIPC Ministers raised concerns about the initiative in four main areas. First amongst these was the issue of non participating creditors - creditors which are refusing to provide their share of relief under the HIPC regime, and in some cases are even resorting to litigation to ensure their claims. The HIPC Ministers noted that Niger had been sued by Taiwan for a total of $72m - a substantial cost to Niger, which is only paying $28m in debt service to all creditors this year. Uganda is also facing legal action by Iraq - and although Iraq is under sanctions, all this means for Uganda is that compound interest will continue to mount on her debts if she loses. Ministers also lamented the slow pace of the promised rapid response legal technical assistance to help HIPCs fend off lawsuits by creditors. Secondly, HIPC Ministers complained about the lack of proposals at the international level to deal with the problem of lower-than-projected export revenues and the impact that this is having on debt sustainability. In particular, they supported Jubilee Research's claim that any 'topping up' of relief provided to HIPCs at Completion Point should be given over and above the so-called 'additional' bilateral relief which is being provided by selected bilateral creditors, including all G7 countries. Thirdly, the HIPC Ministerial Network complained about the number of conditionalities attached to HIPC relief through the IMF's Poverty Reduction and Growth Facility (PRGF), which all countries must sign up to in order to gain relief. Debt Relief International Director Matthew Martin, who chaired the meeting, noted that debt relief is not being delayed because of the time needed to develop participatory in-country processes for developing poverty reduction strategies, or to make decisions about how to spend the savings from relief. On the contrary, he complained that relief is being delayed by traditional 'structural adjustment' style conditionalities, such as privatisation and trade liberalisation- conditionalities which do little to reduce poverty, and in many cases exacerbate it. Finally, the HIPC Ministers called for more action to link debt relief and the Millennium Development Goals (MDGs.) Although they recognised that debt relief could not be the only mechanism for helping countries achieve the MDGs, they did urge the Bretton Woods Institutions to take the link more seriously. In particular, they lamented that 'there continues to be no systematic analysis of the contribution that HIPC relief is making to the Millennium Development Goals and world poverty reduction.' Mrs Diogo stressed that Mozambique presents a clear case of the impact that debt relief can have on poverty reduction. She explained that in Mozambique, savings in debt service payments had been used to increase education spending from 12% to 20% of the recurrent budget. As a result, she noted that there had been a big improvement in educational indicators, such as literacy rates. Aid donors, including the Bretton Woods Institutions, have long been stressing the need for 'country ownership' of development programmes; for 'participation' and 'empowerment' amongst recipients of debt relief and aid. Now the boot is on the other foot. HIPC Ministers are now in the driving seat, they are seeing the impacts of the HIPC initiative first hand, and they are calling for reform. It is time for the Bretton Woods Institutions to start listening. |
