There has been some good news this week for the most highly indebted poor countries (HIPCs) in the world, as leading finance ministers agreed a 23 billion dollar relief package at the World Bank/International Monetary Fund annual conference in Washington. Up to 19 countries could benefit from the programme.
What has been agreed falls well short of the international Jubilee 2000 campaign to cancel debts for the millennium; but it does register progress towards the objective of making the issue a real focus of international politics. Although the details are complex and arcane, and some of them remain unresolved, the central principles involved are straightforward and readily comprehensible.
Much of the debt was built up in the 1970s through unprincipled lending and irresponsible borrowing, including for military equipment. As a result of subsequent adverse movements in the terms of trade, many of the countries affected found it necessary to borrow more simply to pay back what they owed. In order to do so they had to accept cutbacks in essential health and education programmes, stopping development efforts in their tracks.
The various initiatives this year to tackle the problem have concentrated on the poorest states. They have come up against a determination among several of the leading lending nations to discourage expectations that debt default would become acceptable or that any compromise on the general obligation to repay loans is contemplated. Others have been concerned to ensure that whatever relief is made available will go to those most in need, with the extra income earmarked for schools, hospitals and basic services. There are also concerns that conditions imposed by the IMF will contradict the poverty alleviation objective animating the Jubilee 2000 campaign. In his speech to the conference yesterday in Washington the Minister for Finance, Mr McCreevy, supported the HIPCs initiative and acknowledged the extent of popular support for the campaign. He called for further funds to be made available for debt alleviation, taking greater account of human needs in determining eligibility and levels of relief. One expert calculates that this package, together with what was agreed by the Group of Seven industrialised countries this summer, will still meet only one third of the United Nations target to halve global poverty by 2015.
The issue of debt relief is thus a work in progress. But the decisions taken in Washington this week should encourage all concerned to persevere in the effort to keep it on the international agenda.