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US CONGRESS
INTRODUCES BILL TO CHANGE HIPC CRITERIA By Romilly Greenhill 3rd May, 2002 On April 18th, 2002, the United States Congress introduced a Bill which, if brought into law, would serve to radically change US policy on the Heavily Indebted Poor Countries (HIPC) initiative. Given the influential position of the US within the World Bank and IMF, this new bill could serve to play a major role in changing the HIPC initiative. Under the new Bill, an additional sustainability criteria would be inserted into the HIPC initiative. For each country, as well as considering the total ratio of debt to exports, debt sustainability would also be determined by the proportion of the government's own revenues that is spent on servicing their external debt. For countries which are suffering from 'a severe public health crisis', in particular in terms of HIV/AIDS, governments should be paying no more than 5% of their revenues on servicing their debt. For other countries, the ratio would be 10%. These ratios would apply for the first three years after decision point, or until 2005. Not surprisingly, the initiative would exclude countries which fail to co-operate with the US in efforts to combat terrorism or drugs control, or those with 'excessive' levels of military expenditure. The new initiative would ensure substantial additional relief to the HIPCs, most of whom, given current HIV/AIDs prevalence rates, would probably classify has having severe public health crises. For the 26 countries that have already reached Decision Point, debt service is currently taking up an average of 15% of government revenues, a figure that is only projected to fall slightly by 2005, by which time all of these countries should have reached Completion Point. Every single one of the 26 countries apart from Rwanda is currently paying more than 5% of their revenues in servicing their debts. For six countries (Gambia, Guinea, Guyana, Nicaragua, Sierra Leone and Zambia), the figure is currently more than 20%. In total, US debt campaigners have calculated that the initiative could result in additional debt cancellation of $1bn. Further updates on progress in the US Bill will be posted on the website as they become available. |
