Global Policy Forum

Press Release from African Jubilee partners

The IMF-WB sponsored Highly Indebted Poor Countries (HIPC) initiative meant to provide debt relief to developing countries has failed to deliver. Instead HIPC has left many developing countries commiting scarce resources to debt servicing instead of meeting the needs of their people, the majority of whom live in desperate poverty.

This is the conclusion of 44 participants representing eight African countries and several major Jubilee cooperating partners from the North who gathered in Lusaka, Zambia, 8 and 9 October 2002 to address the question, "Will the Current Creditor Arrangements on Debt Make a Difference?"

Our experience of the impact of HIPC answers that question with a resounding NO! HIPC has failed to make a difference primarily because its focus is on economic measures to assure continued debt servicing rather than on social measures to meet the enormous needs of the poor.

Other related reasons for HIPC's failure: debt sustainability estimates are based on unrealistic estimates of economic growth (e.g., increased trade); the conditionalities it imposes are replays of the discredited elements of the Structural Adjustment Programmes (SAP); it lacks an impact assessment of what is actually happening through its implementation; and both the International Financial Institutions (IFIs such as the World Bank and the IMF) and our governments are not practising good accountability regarding priority setting, management, expenditure practices, etc.

We are aware from the recent meetings of the Boards of the World Bank and the IMF in Washington DC that these institutions are not in fact interested in reform of HIPC but simply in increasing the funds available for its implementation. This is not a realistic approach to debt relief that is consistent with their stated objective of meeting the Millennium Development Goals (MDG) of cutting the levels of poverty in half by 2015.

While there are a few HIPC success stories (e.g., increased primary school enrollment, better access to water resources), the fact is that debt relief under HIPC is not benefiting the people as a whole. This can be seen in the many examples we shared from our experiences. We have learned that, contrary to Northern creditors' claims, Uganda is not a "show case" of HIPCs' success, having fallen three times into unsustainable debt levels and now paying almost as much in debt servicing as before HIPC. Similarly, Mozambique has found itself borrowing more since debt relief was offered to it, and 60% of its national budget depends on external credit. Under the HIPC arrangements, Zambia still spends more on debt servicing than on health and education.

An additional major fault we noted in our deliberations was that three heavily indebted African countries facing serious poverty situations - Kenya, South Africa and Zimbabwe - are not included in the HIPC arrangements.

What do we say, then, must be the way forward? We make the following demands:

To the IFIs and creditor countries:

Be responsible and honest enough to admit that HIPC in its present form is not meeting the objectives for which it was established, namely, to achieve "a robust exit from unsustainable debt."

Be ready to move to alternative approaches that tie the sustainability of debt to the ability of governments to meet the Millennium Development Goals (MDG) endorsed by the international community.

Recognise that debt cancellation is in fact the fastest and most effective way of financing poverty eradication programmes.

To our Debt Campaign partners in the North:

Do not let your governments and your citizenry get distracted from the goal of debt cancellation, since the debt problem has not been solved and is still the major block to sustainable development that enables poverty eradication.

Push your governments to push the World Bank and IMF on whose Boards they sit to deliver debt cancellation that focuses on debt sustainability based on the achievement of the MDGs.

Advocate for an independent, fair and transparent arbitration system that ensures just debt solutions that must be accepted by all creditors and debtors.

Keep close contact with Jubilee partners in the South so that our concerns and issues are effectively represented in your campaigns.

To our African Governments:

Acknowledge that the current HIPC initiative is not only not sustainable but also is not working to promote the well being of the majority of our people.

Improve your negotiating capacities in order to move away from reacting to foreign proposals toward setting initiatives to protect our national priorities.

Put in place transparent, accountable and participative mechanisms to assure that any available debt relief goes to poverty eradication programmes and safeguards against future irresponsible borrowing patterns.

Be readily open to listen to civil society's experience and analysis so that our national programmes will have true ownership.

To Ourselves, African Jubilee partners:

Renew our motivations to be involved in this debt cancellation campaign on the basis of our commitment to the poor in our midst.

Recommit ourselves to a debt cancellation campaign that mobilizes people in the widest sense to demand the justice of debt cancellation.

Cooperate with each other more effectively with information and resource sharing.

Demand that our governments put in place transparent, accountable and participative mechanisms to assure that any available debt relief does go to our PRSPs or other poverty eradication programmes.

Commit ourselves to the hard analysis that demonstrates that the current HIPC arrangements are not adequately working in our countries.

Pledge ourselves to monitor our fulfillment of our plans, with specific evaluation in six months.

[Countries represented: Kenya, Mozambique, Malawi, Zambia, Zimbabwe, Angola, South Africa, Uganda, South Africa, Belgium, United Kingdom, Brazil.

For further information, contact Charity Musamba, Jubilee-Zambia, Lusaka, 260-1-290410.]