Debt relief leaves countries worse off

Debt relief leaves countries worse off

An International Monetary Fund-administered initiative to relieve the debt burden on the world's poorest countries is a "fraud" which is leaving countries like Zambia worse off than before, the British aid agency Oxfam said on August 23.

Confidential IMF papers obtained by Oxfam showed that Zambia's interest payments are set to rise from US$136 million in 1999 to $235 million in 2002 when payments for several major IMF loans fall due. Zambia is due to enter the Heavily Indebted Poor Countries (HIPC) initiative in October.

Much criticism of the initiative has centred on its slowness. The promise made by the Group of Eight industrialised countries in June 1999 was to relieve the debt of the 25 most indebted countries by the end of 2000. With just four months to go, only nine countries have formally qualified for relief and none have had any debt cancelled.

But Oxfam said the major problem isn't slowness. Rather, it is the paltry amount of debt relief being offered, which isn't enough to substantially reduce debt repayments, it said. "For a country whose human development indicators are deteriorating as rapidly as Zambia's, this is devastating", Oxfam policy adviser Kevin Watkins said.

The organisation's figures show that six African countries — Mali, Burkina Faso, Tanzania, Mozambique, Zambia and Malawi — will spend more on debt repayments than on basic education even after they graduate from the HIPC initiative.

BY SEAN HEALY

From GLW issue 418