Genoa summit urged to focus on debt relief

16th July, 2001.

By Alan Beattie

Campaigners began a last-ditch drive on Monday to put deeper debt relief on the agenda at the Group of Eight summit in Genoa next weekend, attacking governments for attempting to move attention elsewhere.

Speaking in London, Julian Filochowski, the director of Cafod, the Catholic aid agency, said the Italian government, which will host the summit, had produced a policy paper entitled Beyond Debt. "They believe the job has been done and imply they want to move on," he said. "But we will not leave the debt issue behind. At Cologne [the 1999 G8 summit] we were promised a robust exit from debt."

Twenty-three of the original 41 heavily indebted poor countries (HIPC) have qualified for at least the initial stage of debt relief. G8 governments have resisted attempts to deepen debt relief on offer to write off all debt owed to the International Monetary Fund and the World Bank.

But campaigners have argued that the amount of relief on offer is inadequate to achieve a permanent transition to higher economic growth and a lower debt burden. Jubilee Plus - the think-tank set up by Ann Pettifor, the former director of the debt relief campaign, Jubilee 2000 - will release a report on Tuesday arguing that sustainable exits from debt for the HIPCs will require unrealistically high growth rates.

It says that economic growth for the 23 qualified HIPCs averaged 3 per cent during the 1990s but is predicted by the World Bank almost to double to an average of 5.5 per cent in 2000-2010. "However, these countries have all undertaken IMF reforms in the previous decade without experiencing such dramatic improvements in growth."

It also attacks the debt-to-export sustainability indicators used by the IMF/World Bank to determine the amount of relief on offer, arguing that they are arbitrary and inflexible. Res- earchers at Debt Relief International, a consultancy, found that debt rescheduling had frequently occurred in countries with the debt-to-government revenue ratios likely to be prevalent in HIPCs even after relief, the report says. Movements in the terms of trade are likely to knock some countries off target for debt reduction.

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