IMF directors back revised HIPC targets, sort of (fwd)

[Robert Weissman <rob@essential.org>]

IMF directors back lower targets, thresholds for debt relief
Date: Fri Aug 13 19:00:13 CDT 1999

   WASHINGTON, Aug 13 (AFP) - The IMF executive board has backed changes to
a joint World Bank-IMF debt initiative to provide broader relief at a faster
pace to some of the world's poorest nations.
   International Monetary Fund first deputy managing director Stanley
Fischer said directors, at a meeting August 5, endorsed proposals contained
in a paper prepared by staff members at the Fund and the Bank.
   "Directors agreed with the general approach, including lower targets and
thresholds that would provide deeper and broader relief," Fischer said in a
statement.
   But he cautioned that the findings were only preliminary, with their
implementation dependent on a decision to increase the IMF's contribution to
the scheme.
   The more than two-year-old heavily indebted poor countries (HIPC)
initiative offers debt relief to around 40 of the world's most impoverished
nations on condition that they demonstrate sustained compliance with
IMF-approved economic reforms over a six-year qualifying period.
   But IMF and World Bank officials have been under increasing pressure to
expand and speed up the initiative, as only two countries have to date
actually had their external debts eased.
   According to Friday's statement, directors agreed that debt
sustainability targets should be lowered to a debt-to-export ratio of 150
percent, replacing the current target range of 200 to 250 percent.
   They also concurred that an assessment of debt relief eligibility should
be made according to data at the beginning of the review process rather than
at the end.
   "These overall changes would broaden the number of countries that could
potentially qualify for HIPC initiative assistance," according to Fischer.
   He said the IMF executive board likewise supported the introduction of
"floating completion points" in the qualifying process, "as this would base
the assessment of a country's performance on particular outcomes rather than
the length of the track record."
   "The use of floating completion points could also provide an incentive to
implement reforms quickly and develop ownership over the timetable,"
according to Fischer.
   Directors in addition were sympathetic to the provision of interim
assistance to debt-ridden countries, since such funds could free up more
resources for increased social spending.