February 21, 2002
Government creditors should offer debt relief and more aid to impoverished countries in the former Soviet Union in exchange for economic reform and plans to fight poverty, Britain's development minister said on Thursday.
Addressing a World Bank/International Monetary Fund conference on development in Armenia, Azerbaijan, Georgia, Kyrgyzstan, Moldova, Tajikistan and Uzbekistan, Clare Short said that new funding would however be conditional on action.
"No strategy - and no amount of international support - will work without genuine commitment - both from governments and people - to poverty reduction, and real determination to put in place the often difficult reforms necessary to achieve this," Short said in a speech.
A copy of her speech, to be delivered to the conference later on Thursday, was made available to the media in advance.
Some of the countries in the former Soviet Union have levels of poverty which match those in poor countries in Africa, Asia and Latin America and since the collapse of the Soviet Union, levels of social spending have halved as debts have soared.
According to a study by the World Bank and IMF, debts of the five poorest countries, Armenia, Georgia, Kyrgyzstan, Moldova and Tajikistan now total $4.3 billion.
In Kyrgyzstan debts have ballooned from zero in 1991 to almost $1.7 billion and levels of debt are such that they are in excess of 150 percent of exports and more than 250 percent of government revenues.
Short said that rich creditor countries like Britain should be prepared to offer debt reduction on concessional terms in order to help the poorest countries as well as increase aid and concessional loans.
Debt relief for the poorest should be dealt with in the first place through the Paris Club of sovereign creditors which offers a two-thirds debt reduction for the poorest countries.
"If Paris Club treatment is not sufficient to make debt sustainable, then countries in this region should be treated on an equal footing with other countries with similar unsustainable levels of debt, and be considered for debt relief under the HIPC (Heavily Indebted Poor Countries) initiative," she said.
HIPC offers enhanced debt relief combined with fresh loans and grants.
Short said it was crucial to involve Russia in tackling the region's debt problems as it is a big creditor of the five poorest countries and holds 14 percent of the debt of these countries, the same as the Paris Club creditors.
"Russia, as the most important bilateral creditor, must play a full role in the design of such a package," Short said.
More Information on Debt Relief
FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.
