Heavily indebted poor countries
In 1996, the World Bank/International Monetary Fund agreed the Heavily Indebted Poor Countries (HIPC) Initiative for 42 countries with little prospect of meeting their repayments. These countries comprise 600 million people, half of whom live on less than $1 a day. Their life expectancy averages seven years less than that of people in other poor countries.
This initiative takes several years. After some years of embedding policy reform, countries are deemed to be at 'decision point' (the stage at which they start to receive interim debt relief). It is only when they reach 'completion point' after a further period that debt relief becomes permanent.
Twenty-seven countries currently receive significant debt relief, but Laos and Vietnam rejected it because of the conditions attached. Non-governmental aid agencies are also unimpressed by the 'generosity' of this programme. Half of HIPCs still spend 15% of government revenue servicing debts. Debt relief is also being used as an excuse to decrease aid, when the poorest counties need both.
Jubilee 2000, which spearheaded an imaginative and ambitious campaign to cancel Third World debt, had previously identified 52 countries as being in most need of debt relief/cancellation. Despite their considerable debts, none of the tsunami-affected countries were among them.
Some commentators question whether the richer world can afford debt relief. The World Development Movement (WDM) has calculated that after existing commitments on debt relief have been delivered, the 42 HIPC countries would still shoulder multilateral debts of $34.9bn (£18.6bn). For £1.3bn, Britain could write off its share of these debts over a 10-year period. That would coincide with 2015, the target year for meeting the Millennium Development Goals of halving world poverty. The WDM calculates that over that period it would cost each person in Britain £2.85 a year. It would cost other rich nations a similar amount.
This initiative takes several years. After some years of embedding policy reform, countries are deemed to be at 'decision point' (the stage at which they start to receive interim debt relief). It is only when they reach 'completion point' after a further period that debt relief becomes permanent.
Twenty-seven countries currently receive significant debt relief, but Laos and Vietnam rejected it because of the conditions attached. Non-governmental aid agencies are also unimpressed by the 'generosity' of this programme. Half of HIPCs still spend 15% of government revenue servicing debts. Debt relief is also being used as an excuse to decrease aid, when the poorest counties need both.
Jubilee 2000, which spearheaded an imaginative and ambitious campaign to cancel Third World debt, had previously identified 52 countries as being in most need of debt relief/cancellation. Despite their considerable debts, none of the tsunami-affected countries were among them.
Some commentators question whether the richer world can afford debt relief. The World Development Movement (WDM) has calculated that after existing commitments on debt relief have been delivered, the 42 HIPC countries would still shoulder multilateral debts of $34.9bn (£18.6bn). For £1.3bn, Britain could write off its share of these debts over a 10-year period. That would coincide with 2015, the target year for meeting the Millennium Development Goals of halving world poverty. The WDM calculates that over that period it would cost each person in Britain £2.85 a year. It would cost other rich nations a similar amount.