[stop-imf] African Censure for World Bank over Debt Relief Program

[Robert Weissman]

Excerpted from World Bank Press Review: Headlines for Tuesday, October
22, 2002
Date: Tue, 22 Oct 2002 09:38:25 -0400

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African Censure for World Bank over Debt Relief Program
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African finance ministers yesterday criticized the World Bank's debt
relief program for failing to keep step with goals to reduce poverty in
some of the poorest African countries, reports the Financial Times.  At
the end of a three-day meeting hosted by the UN, the finance ministers
called for the Heavily Indebted Poor Countries (HIPC) debt relief
initiative to be brought in line with the UN's Millennium Development
Goals (MDGs), which seek to halve poverty levels by 2015.  African
governments want the World Bank and donor countries to move beyond HIPC to
offer greater debt relief and to extend relief to non-HIPC countries.

"It is clear that the HIPC initiative is not working well enough. Only six
African countries have reached their completion points and for some of
them the debt remains unsustainable," the ministers said.  "What is needed
is to move faster to increase relief, to align it with the pursuit of
Millennium Development Goals and to free up resources for development."

The World Bank considers the HIPC initiative a package of comprehensive
measures to allow developing countries to exit from high unsustainable
debt levels. The initiative, first agreed in 1996, was reviewed three
years ago and has been heavily championed by Western governments and Irish
rock musician Bono. Under the program, debt relief is awarded in return
for the implementation of poverty reduction and economic reforms by
governments.

The current value of public debt in the 33 countries that qualify for
HIPC=97such as Mozambique and Uganda=97is about $90 billion. HIPC and
traditional debt relief measures are expected to reduce it by half.

The finance ministers had met in Johannesburg under the umbrella of the UN
Economic Commission for Africa to seek ways of implementing the New
Partnership for Africa's Development (NEPAD), a plan to promote good
governance and greater aid and investment flows. Within the NEPAD
framework, they want deeper and faster measures of debt relief.

At the heart of their debate is a voluntary mechanism of review by African
countries of each other's governance and economic policies. Those
countries that submit to the review are expected to receive benefits from
donor countries.  So far only Ghana and Tanzania have stepped forward for
review. One of the greatest incentives for doing so is the promise of debt
relief.

"Ministers have been saying that they have talked about NEPAD at more than
seven meetings and they now want to move to some action. Implementation is
the issue now," said South African Finance Minister Trevor Manuel.

The news comes as Belgian Prime Minister Guy Verhofstadt writes in Der
Standard (Austria) that debt relief for the poorest countries in the world
can be the right instrument to reduce world poverty, especially if the
HIPC program were linked to development projects. Multilateral and
bilateral creditors should come together through the HIPC program and
align the objectives of the fund to the goals of the UN, he says.