| | Debt
relief "and the economic pride of Africa": debtor finance ministers' "club" issues
declaration
08
June 2001
On the 5th June, 2001, 25 HIPC Finance Ministers met
in London to discuss both progress and problems with the Heavily Indebted Poor
Countries (HIPC) initiative. The meeting was dominated by African finance ministers,
one of whom said, "when we talk about debt relief …we talk about the economic
pride of Africa."
The meeting was organised by Debt Relief International
and the UK Department for International Development.At the end of a long day of
discussions ministers agreed on a "London Declaration" in which common concerns
and problems are spelt out.
"Growth is coming back"
Talking
about the financial needs of Africa, a common consensus emerged that what the
IMF and World Bank are doing in Africa is stimulating economic growth. "Debt relief
without growth is useless," said one minister "growth is coming back!"
However,
the debtor nation Ministers felt that the "problem was that pro-poor oriented
growth policies might not necessarily be compatible with accelerated growth which
is required to reduce poverty".
They argued that achieving sustainable
poverty reduction requires increased capacity from HIPC administrations and civil
society, "and therefore sufficient capacity building resources should be made
available to HIPCs".
One point of common agreement was that countries
involved in the HIPC scheme should move faster towards Decision and Completion
Points in order to get debt relief. Ministers also called for a more flexible
design for the HIPC initiative, more tailored to the needs of individual countries,
especially when "humps" of debt service upset the World Bank's sustainability
ratios.
Emphasis was given to the need to objectively assess debt sustainability
at Completion Point in the HIPC process. HIPC economies are particularly vulnerable
to external shocks, such as decreases in the price of coffee and other commodities,
and the HIPC ministers argued that these shocks should be taken into account before
imposing economic targets.
The effects of HIV/AIDS in economic growth
should also be included.The debtor finance Ministers urged the Paris Club of creditors
to move the so-called "cut-off date" which excludes all debt incurred after the
first appeal to the Club for relief. Malawi has had her "post cut-off date" included
for relief, and Ministers urged that this approach should be extended to other
HIPC countries.
As far as non-Paris Club creditors is concerned, the debtor
nation finance ministers called for a conference with non-Paris Club creditors
in order to accelerate debt relief comparable to that being provided by Paris
Club creditors, under the HIPC scheme.
Ministers also urged the cancellation
of 100% of all bilateral debt service from Decision Point, and cancellation
of 100% of stock at Completion Point. They argued that debt service payments
to bilateral creditors be held in a trust for those countries which have yet to
reach Decision Point under the HIPC scheme.
In addition, new financing
is urgently needed, the ministers agreed. Aid flows should increase, moving from
project support to budget support. It was argued that all OECD countries should
provide free market access for poor countries, removing all structural barriers
to free trade.
Ministers
regard early debt relief essential to lower the high levels of poverty, fulfill
the high expectations of the people and improve government credibility.
Talking
informally about future meetings, ministers agreed to meet at a regional level,
but proposed that these meetings should "include World Bank and IMF representatives,
with whom dialogue is essential". |
