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Africa: Debt Update
Africa: Debt Update
Date distributed (ymd): 000113
Document reposted by APIC
+++++++++++++++++++++Document Profile+++++++++++++++++++++
Region: Continent-Wide
Issue Areas: +economy/development+
Summary Contents:
This posting contains several documents from late 1999 with
updates and new links on the status of African debt after new
actions by creditor countries and multilateral institutions.
For additional background information and links to other sites
consult
http://www.africapolicy.org/action/debt.htm
+++++++++++++++++end profile++++++++++++++++++++++++++++++
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Update from Lydia Williams
Policy Advisor, Oxfam America
(http://www.oxfamamerica.org)
December 13, 1999
Outcome of G-7 Meeting on HIPC (Paris, December 10)
U.S. Treasury Secretary Larry Summers announced today at a
press briefing that four countries - Uganda, Bolivia,
Mozambique, and Mauritania - are on track for receiving debt
relief in January under the "enhanced" Heavily Indebted Poor
Country (HIPC) initiative of the World Bank/IMF program for
the poorest countries.
Which countries and when?
Some eleven countries could receive relief by the Bank/Fund
spring meetings. In addition to the first four countries, five
more - Mali (April), Senegal (February), Benin (February),
Burkina Faso (March), and Tanzania (March) - could begin
receiving relief by the spring. The decision points, in
parentheses, are based on Bank and Fund staff assessments
about when the necessary documents should be ready. At the
meeting, the United States representative said Burkina's poor
track record on participation could be grounds for a delay.
Cote d'Ivoire and Guyana were also identified as possible
candidates for decision points in the first or second quarter
of 2000, although the United States raised concerns about the
former's governance record and "could be off track" on the
IMF program and the Bank and Fund staff seemed to be closer to
the US position than the rest of the G-7. While formal
approval rests with boards of the World Bank and the IMF, the
G-7 consensus, reached at a December 10 Group of Seven meeting
held in Paris, carried a great deal of weight in the boards.
Uganda, Bolivia, and Mozambique have already begun to receive
limited debt relief under the existing HIPC program launched
in 1996. Widespread criticism of the program among religious
and development groups led the Group of Seven at the June
summit in Cologne to expand the program to provide deeper and
faster relief to more countries. These countries will now
receive additional relief to bring their debt stock down 150%
of exports; Mauritania and the others will receive relief
under the program for the first time.
Implementation of the PRSP
There was consensus among the G-7 that retroactive countries
should move quickly to decision points where they would begin
to receive interim debt service relief and exit from the
program (i.e. receive unconditional debt stock reduction) when
they have a Poverty Reduction Strategy Paper approved by the
boards of the Bank and Fund, which may be a matter of months.
There was also consensus among the G-7 that new
(non-retroactive) cases should have a PRSP in place by the
decision point and reach the completion point when they have
met targets outlined in the PRSP. Requiring a full PRSP at the
decision point would give countries incentive to do a rush job
on the PRSP and thus undermine participation and quality in
order to get debt relief they desperately need, or it would
result in undue delay in moving countries to decision points.
Staff papers on how the PRSPs should be implemented have been
produced for board decisions at the Bank and Fund later this
month.
The United States was alone in arguing that countries should
meet performance targets in the four areas (outlined in the
Cologne agreement) before the decision point: governance,
economic management, poverty reduction, and transparency /
accountability / participation. The US argued for "enhanced
relief for enhanced performance" but others made the case for
"enhanced relief for commitment to poverty" and cautioned that
the expectations of the US in these areas was too high.
Under the new program, countries that meet criteria related to
governance, poverty reduction, and economic management, and
agree to reinvest debt relief into schools, health care, and
other basic needs will receive debt relief. Up to 33
countries, most of which are in Sub-Saharan Africa, are
potentially eligible for relief worth a total of $27 billion
net present value.
Financing
The meeting also addressed the financing gap. The European
Union has approved a $700 million contribution to the HIPC
Trust Fund for ACP countries. There appears to be sufficient
funds for the early African cases since much of the $200
million in the Trust Fund is earmarked for Africa. But
financing is still not secure for Bolivia as the IDB has yet
to find financing either from its own resources (or from a US
contribution to the Fund). The G-7 agreed that countries
should move to decision points regardless of whether funding
was secure as this would put pressure on the institutions (and
presumably the US Congress) to find the needed funds.
During last month's budget agreement, President Clinton and
Congressional leaders reached agreement to provide $110
million of the $320 million requested by the Administration as
well as approval of a plan to enable the IMF to revalue some
of its gold reserves to finance its portion of the initiative.
The President lists the debt relief program among his foreign
policy accomplishments of the last year. In the coming year,
the White House is expected to ask Congress for roughly $600
million to cover the U.S. share of the international debt
relief program. Failure of the Congress to provide full
funding for the debt relief program has left a financing gap
that debt relief advocates and other wealthy nations have
urged the United States to move quickly to fill or risk
shortchanging countries that have struggled to meet the debt
program's conditions. Congress must also reauthorize the IMF
gold revaluation plan.
The World Bank
News Release No. 2000/121/S (excerpt)
Contact: Andy Kircher (202) 473-6313
Joint Statistics Published on External Debt
Fourth in a Series of Quarterly Releases
Washington, December 1, 1999 -- The World Bank, the Bank for
International Settlements (BIS), the International Monetary
Fund (IMF), and the Organization for Economic Cooperation and
Development (OECD) have jointly published the fourth in a new
series of quarterly releases of statistics on the external
debt of 176 developing and transition countries, together with
data on international reserves.
The new series of releases, which launched in March 1999, is
the outcome of a partnership of four international agencies
that compile international debt information. The quarterly
reports offer data from market, creditor, and debtor sources
on various components of developing country debt. They cover
debt due within a year, debt owed to banks, debt securities,
debt flows, and international reserves, as available.
The publication is available on each agency's website,
including the World Bank's at
http://www.worldbank.org/data/jointdebt.html Click
on "Joint Site" to access the information. ...
The coverage, definitions and limitations are explained in a
methodological note on the website. The figures cover
essentially all countries and territories on the list of aid
recipients of the Development Assistance Committee of the
OECD, including practically all non-OECD countries, as well as
the Czech Republic, Hungary, Korea, Mexico, Poland and Turkey.
Data for offshore financial centers are presented separately.
For a Debt Free Millennium: the South - South Summit
Gauteng, South Africa - November 18 - 21, 1999
From the three continents of the South, leaders of social
movements, political and religious organizations gathered at
the First Jubilee South Summit held in Gauteng, South Africa
from November 18th to 21st, 1999. 130 delegates from 33
countries, representing national and regional Jubilee debt
cancellation campaigns as well as other popular movements,
deliberated and acted to take forward a common analysis,
vision and strategy to build, from the grass roots upwards, a
new world characterized by economic and social justice in
which the debt is addressed by governments North and South as
a matter of restitution and reparation for the crimes
committed against our peoples and environment.
Jubilee South (JS) is a movement of social movements in South
countries. Delegates shared a secular understanding of the
"New Beginning" symbolized by the principle of Jubilee, while
referring to South as a political category encompassing the
oppressed and their organizations around the world in their
struggle to end the prevailing neoliberal paradigm of power
and policy, symbolized by the odious political and ideological
construct called debt.
Delegates came to a general agreement on principles,
perspectives and a strategic framework for addressing the debt
problem. On the level of principle, Jubilee South reiterated
its call for total debt cancellation for all South countries
taking into account that it is the North that is in
debt-historically, ecologically, socially and morally-to the
peoples of the South. The slogans "Don't Owe, Won't Pay" and
"Who owes Whom?" sums it all up.
In this regard, JS proposes to work toward the goal of popular
and governmental collective repudiation of the debt, and the
formation of popular and governmental alliances. We envision
a New Beginning with no room for immoral debt servicing at the
expense of the poor. We build on struggles in the South that
continue to prove the bankruptcy of the notion that there is
no alternative and shameful integration into a global
political economy characterized by submission to the United
States of America and the other rich countries, to foreign and
corporate capital, and to savage destruction of the
environment.
Second in regard to perspectives, Jubilee South rejected all
policies derived from the so-called Washington Consensus and
neoliberal paradigm. Delegates demanded an end to Structural
Adjustment Polices (SAPS), at the center of neoliberal
imposition and co-option, and all the new versions of SAPS
including those encompassed in the so-called HIPC initiative
and IMF Poverty Reduction Facility, as well as the notion of
external conditionality in all of its dimensions or forms. The
IMF and the WTO have no moral authority to impose conditions
and have no capacity to provide solutions to problems they
have created and intend to perpetuate. They cannot be
reformed. JS says "Shut them Down"!
The JS Summit strategic framework places primary attention on
the need to change the policies and approaches toward debt and
neoliberalism that characterizes most of our governments in
the South. We challenge current debt policies and we raise the
issue of governance and State responsibilities. Today most of
our governments and parties are part of the problem, but we
will work strenuously so that they can also be part of the
solution; so that human welfare and equitable development are
placed above debt servicing and irresponsible borrowing.
The struggle for international democracy is predicated on the
struggle for national democracy. We call on our movements and
parties in the South to forcefully incorporate the call for
debt repudiation in their platforms, and we call on movements
and Jubilee campaigns in the North to press for the total debt
cancellation for all South countries, not as a matter of
charity or provision of credit relief, but as an elementary
act of justice that lays a foundation for the construction of
a new global order where the peoples of the Global South will
live in dignity and in full enjoyment of their human rights in
harmony with the environment, in consistency with the struggle
of previous generations and the rights of the generation to
come.
Jubilee South Summit - Gauteng, South Africa
- November 21st, 1999
For comprehensive coverage of the Jubilee South Summit, visit
our web site: www.jubileesouth.net/ [APIC Note: at the time
of this posting -- mid-January 2000 -- this web site is not
available for technical reasons. You may wish to try the link
again at a future date.]
For more information or comment, contact Neville Gabriel, Tel
27-083-449-3934
Excerpts from Economist Christmas Day Editorial
The Economist (http://www.economist.com)
25th December 1999
Do you believe in fairies?
(excerpts only; for additional comment and links to the full
text see http://www.jubilee2000uk.org/news)
At a time of year celebrated in much of the world as a season
of goodwill--and one, moreover, capped by millennial
fervour--politicians could be expected to come up with the
odd grand gesture. Few come grander than that unveiled by the
British government this week: "Britain ends third-world debt,"
blurted one newspaper headline. If only. Like so many
Christmas presents, the content of this one does not live up
to the wrapping. In that sense, Britain's latest offer is no
different from the lavish promises made in recent months by
other rich nations--notably America--about relieving the debts
of the poorest countries. Such promises favour big, round
numbers--in Britain's case a juicy 5 billion pounds ($8
billion)--and soft-focus millennial visions. Nothing wrong
with that, of course, were it not for the devils lurking in
the detail of an important debate about how to help the poor.
There are at least three reasons why such offers of debt
relief often turn out to be less generous than they seem.
First, they tend to be based on a flawed assumption: that,
without "relief," the debt might one day be paid back. In
fact, much of it is already hopelessly irretrievable. Hence
the perverse effect in some cases of the Heavily Indebted Poor
Countries (HIPC) debt-relief initiative, launched by the IMF,
the World Bank and donor countries in 1996. Strictly applied,
it would actually have increased some countries' annual
debt-service payments (Mali's, for example). Instead of
freeing resources in the debtor countries, the initiative
reallocated them among its creditors. It offered relief, for
the first time, on loans from the International Monetary Fund
and the World Bank. Most of these were being serviced, because
the IMF and the rest are preferred creditors, and to default
on loans from those institutions is in effect to resign from
the international system. But the HIPC scheme also covered
bilateral debts to sovereign creditors--many of which the
borrowers had long ceased paying. ...
Which is a second, related reason why so many debt-relief
announcements mislead: they almost invariably use figures
based on the face value of the debt, which bears little or no
relation to a realistic expectation of how much might be
repaid. Since rich-country lenders have tended not to write
the debt off, the nominal value actually keeps on rising even
without fresh lending. The magic of compound interest has cast
such an evil spell that, in sub-Saharan Africa, for example,
two-thirds of new sovereign debt since 1988 has been incurred
to refinance arrears and capitalised interest. So the true
cost of the HIPC package of relief for 41 of the poorest
countries is a mere fraction of the headline figure of $100
billion.
Third, show-stealing politicians naturally like to talk up the
importance of each new step in what has become a lengthy
debt-relief process. They prefer to see headlines covering the
cumulative effect, rather than yet another refinement of an
existing scheme. Britain's latest offer, for instance, is in
any event conditional on the proposed beneficiaries' meeting
the criteria for the HIPC scheme. ...
Additional links to longer articles and analyses
Oxfam International Policy Paper, October 1999
Outcome of the IMF/World Bnak September 1999 Annual Meetings:
Implications for poverty reduction and debt relief
http://www.oxfam.org.uk/policy/papers/wbimf.htm
Alternative Information and Development Centre
Dot Keet, "The International Anti-Debt Campaign: An Activist
View from 'The South' to Activists in 'The North' ... and 'The
South'
http://aidc.org.za/archives/dot_keet_debt.html
"How is Aids related to Debt Burden?"
Dr. Peter Henriot in Times of Zambia, November 2, 1999
reposted in AF-AIDS discussion
http://www.hivnet.ch:8000/africa/af-aids/viewR?514
This material is being reposted for wider distribution by the
Africa Policy Information Center (APIC). APIC's primary
objective is to widen international policy debates around
African issues, by concentrating on providing accessible
policy-relevant information and analysis usable by a wide
range of groups and individuals.
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