Real Progress Report on HIPC

This New Economics Foundation report is intended to shadow the official World Bank and IMF annual HIPC Status of Implementation Report, and states that it examines questions that the official HIPC reports do not, including:how much debt has actually been cancelled?are creditors really sharing the burden of debt relief under the HIPC initiative?is HIPC debt relief enough to allow countries to meet the Millennium Development Goals?why is HIPC moving so slowly?The report finds that:the HIPC initiative is severely behind schedule, with only eight countries having received stock-of-debt reduction compared with a projected twenty-one by this point in timethe principle of ‘burden sharing’ is being violated, with the IMF and the World Bank in particular, failing to take their full share of HIPC reliefcreditor litigation against the HIPCs remains a serious issuecountries are being delayed in the HIPC initiative by conditionalities that are not relevant to debt relief, including overly stringent fiscal criteria and the requirement to privatise large swathes of the economythe global economic outlook, falling commodity prices, and the HIV/AIDS epidemic look set to put severe strain on the HIPCs over the next few yearsdebt sustainability should be defined according to whether or not countries will be left with sufficient resources to meet the Millennium Development Goals after debt relief; and according to this criteria, the HIPC initiative is failing to restore the majority of countries to debt SustainabilityThe paper argues that HIPC is doing so badly because it is unjustly dominated by creditors, and that reforming the HIPC initiative will require a radical reform to the current creditor dominated framework.Based on these findings, Jubilee Research, together with CAFOD, Christian Aid, Oxfam International and Eurodad, call for radical reform of the HIPC initiative. In particular:rich countries must provide enough debt relief to help poor countries to meet the internationally agreed Millennium Development Goalsdebt relief must be accompanied by a new ‘contingency financing’ mechanism to help poor countries weather economic shocksheavily indebted poor countries must no longer be forced to follow strict IMF conditionalities to be eligible for debt reliefthe World Bank and the IMF must provide their fair share of debt relief under the initiative, funded by IMF gold sales and reductions in World Bank reservesthe international community must provide financial and technical assistance to HIPCs to help them fight litigation by private sector creditorsthe World Bank and the IMF must be more transparent in their reporting of progress on the HIPC initiative