Global Policy Forum

Leading representatives of the US Government along with the IMF and World Bank came under fire for the slow pace of the Cologne Debt Initiative (HIPC II) at a conference hosted by the Center for International Development at Harvard University on Monday, 1st May. President Mogae of Botswana joined Prof. Jeffrey Sachs of the Center, and Ann Pettifor of Jubilee 2000 Coalition in expressing dismay at the slow pace of debt cancellation, and at the lack of vision by creditors in the face of the Aids epidemic, one of the worst in human history. Contributors proposed new approaches and mechanisms for delivering deeper, broader, faster debt cancellation.

The harsh criticism reflects growing anger that only 5 countries have received some debt service relief, and only one country, Uganda has had debt cancelled since the G8 Summit in Cologne in June 1999. "More of the $100bn commitment to cancel debt was carried out before Cologne, than has been delivered since" said Pettifor, referring to the $11bn cancelled under Paris Club arrangements before Cologne. "Only$1.4bn has been cancelled since Cologne", she added.

President Mogae of Botswana in a strongly worded speech criticised the progress of the HIPC initiative and called for more action from the creditors. "It is morally unacceptable" he said, "that a fifth of humanity remain submerged in absolute poverty and deprivation, while many of the rest of mankind are enjoying spectacular advances in their living standards.......Despite the recent enhancement of the HIPC initiative, debt relief to the target countries must be broader, deeper and faster."

President Mogae spoke of the problems of the process countries have to undergo to be eligible for debt relief. Currently highly indebted poor countries have to meet IMF macro-economic targets, and develop a poverty reduction strategy paper (PSRP) before they receive debt cancellation. Whilst welcoming the new focus on poverty reduction, Mogae pointed out that implementation of PSRP was delaying delivery of debt cancellation while the "situation on the ground goes from bad to worse every day."

Mogae said that other countries were being unfairly excluded by circumstances outside their control: "Countries which are desperately poor and whose debt service obligations are much too high ...often find their reform programmes under IMF/World Bank support thrown off course by political turmoil and social unrest. Such countries also need help and badly too. The HIPC initiative would treat them as undeserving. But they may be considered deserving, perhaps even more so than the others, on some alternative scales of judgements."

Delegates to the conference included Kwesi Botchwey, for 13 years finance minister of Ghana, Karen Lissakers, US Executive Director at the IMF, Alan Meltzer of the Meltzer Commission, Steve Radlet of the US Treasury, a range of bankers, senior academics, representatives of the UN and Commonwealth Secretariat as well as the High Commissions of Madagascar, South Africa, Cote d'Ivoire, Angola, Honduras and Sierra Leone.

Delegates debated the merits of awarding debt cancellation to countries like Uganda after that country's decision to purchase a $32 million jet for President Museveni, financed by an expensive commercial loan. This decision delayed debt cancellation for Uganda. Ann Pettifor noted that : "the Ugandan debacle occurred for two reasons: a) because a western government encouraged the purchase of the jet by using taxpayers funds to back the loan for the jet through an export credit guarantee. And b) because the IMF and US Treasury's surveillance of Uganda's Poverty Reduction strategy was limited to a two-day trip to Kampala to investigate whether Uganda was inviting the participation of the people of Uganda. Such trips" she argued "do not provide the checks and balances needed to ensure that civil society is consulted over decisions to buy top-of-the-range jets for Presidents.

"Clearly a more meaningful approach is needed" she continued. "Creditor control over conditionality has failed the poorest people. That is why Jubilee 2000 is calling for an independent arbitration process between the debtor government and creditors; a process which must take place locally and involve for example, opposition parties, the media and the churches. Debt cancellation is a one-off action, but its impact extends over decades. It is not a one-off handover of money, but an agreement that money need not be paid over a long period. Therefore participation must be in place over a long, sustained period, during which the debtor government should be made accountable to its people for borrowing decisions. "

Dan Driscoll-Shaw, National Coordinator Jubilee 2000/USA, who had just returned from attending a Jubilee 2000 Coalition consultation over debt cancellation in Bolivia, argued that the Bolivian experience was a practical example of how civil society could play a leading role in the debt relief process. He outlined the extensive consultation process that the Bolivian Jubilee 2000 Campaign had undertaken, against the odds of a government imposed state of emergency, and reported on the rejection of IMF policies by representatives of small business, the farming community and other sectors in Bolivia.

Jeffrey Sachs from the Center of International Development reminded the conference that "political leadership for debt cancellation now runs ahead of IMF/World Bank process of debt cancellation. All the announcements of 100% debt relief demonstrate that the world's leaders recognised that the Cologne Debt Initiative was not enough" . He called on the World Bank and IMF to catch up with political opinion in the US and Europe.

At the end of the conference, Prof. Jeffrey Sachs and Ann Pettifor issued a statement which condemned delays of the Cologne Debt Initiative and called for an imaginative new approach to addressing the health crises in Africa. The statement noted the commitment made by 40 African leaders in the week before, in Abuja, Nigeria. In this statement African leaders pledged to place Malaria and other public health crises at the center of their development strategy. They called on western governments and multilateral institutions to divert all debt service payments made by the 41 countries defined as HIPCs into a special fund, the resources of which would be dedicated the urgent public health crises of the HIPC countries, especially HIV/AIDS, malaria, and tuberculosis.

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