Global Policy Forum

A report published today by the World Development Movement (WDM) reveals how the International Monetary Fund (IMF) is delaying debt relief to the world's poorest countries. The report, entitled ‘Condition Impossible: The Real Reasons for Debt Relief Delay', is published on the eve of the IMF and World Bank's Annual Meetings in Prague. It takes a detailed, country by country look at the first 25 Heavily Indebted Poor Countries (HIPC) expected to receive debt relief. It shows that IMF conditions that are, at best, irrelevant to poverty reduction are responsible for holding up debt relief. The report is a direct challenge to the IMF, and politicians who claim that the speed of debt relief is in the hands of the indebted countries.

Jessica Woodroffe, WDM's Head of Campaigns, said: "Holding up debt relief because a country has not privatised its cotton or copper industry is absurd. It is nothing to do with ensuring debt relief is spent on poverty reduction but everything to with the IMF forcing countries to fit its Jurassic economic models."

Seven of the first ten countries to qualify for debt relief under the IMF's Heavily Indebted Poor Countries Initiative, were delayed because they were unable to meet detailed conditions imposed by the IMF's Enhanced Structural Adjustment Facility (now called the Poverty Reduction and Growth Facility). These were mainly complicated and unpopular privatisations. The IMF is aiming to have ten more countries qualify for debt relief before the end of this year. Of these, six are being delayed because they are not meeting IMF conditions.

The report shows that changes made at last year's IMF and World Bank Annual Meetings have made little difference to the content of the debt relief programme. It claims that "debtor countries still labour under traditional IMF conditions."

"A country's commitment to poverty reduction should not be judged on whether it has completed complicated, unpopular and sometimes harmful, IMF conditions. The IMF and its shareholders must stop blaming the victims for the slow progress and start delivering the debt relief," said Ms Woodroffe.

The report can be found here.

Excerpts from the report:

1. IMF conditions that have caused debt relief delay include:

Benin - Forced to liberalise cotton sector and introduce performance based compensation system for its civil service.

Bolivia - Debt process delayed by three months on IMF presumption of non-compliance to ESAF conditions.

Tanzania - Complicated privatisation of National Bank of Commerce held up debt relief by months.

Zambia - Forced to privatise copper mines leading to the loss of 60,000 jobs.

2. The report shows Mali's experience is typical:

"Mali's most recent agreement with the IMF, signed in August 2000, lists almost 100 macroeconomic and structural adjustment measures to be implemented in the period 1999-2002. Many of these measures are related to privatisation and reorganisation of activities traditionally conducted by the government. The government has had particular problems with reorganisation of the cotton sector, the partial privatisation of the main energy company and the opening up of the telecommunications sector. Of the 11 structural benchmarks the government agreed to for 1999/2000, only three were successfully met."

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