World Bank, International Monetary Fund write off some debts

Debt cancellation too late, for too few, but at last, not too little

September 26, 2005 -In a historic move, the World Bank and IMF agreed, yesterday in Washington, to write off debts owed them by some of the world's poorest countries. The plan to write off the debts of countries that go through the World Bank and IMF minimum 6 year debt program was called for by the G8 earlier in the year, but had been resisted by other governments and the institutions themselves. Last minute pressure by Canada and others led to the adoption of the G8 plan.

"We congratulate Canada and other governments for their efforts to get some of the poorest countries out from under the burden of debt," said John Mihevc, of KAIROS: Canadian Ecumenical Justice Initiatives and Co-Chair of the Halifax Initiative Coalition. "However, we have serious concerns abut the disastrous economic policies that continue to be imposed on countries as a condition for receiving debt relief."

Yesterday's agreement will see the debt cancellation for 18 countries immediately, 9 eventually, and potentially another eleven. The debt plan could eventually free up $US 40 to 50 billion in resources for qualifying poor countries. While the debt deal is viewed as a significant step forward, it contains some severe limitations in terms of the list of countries covered as well as the conditions attached before countries might qualify.

Debt cancellation will be available only for countries who "graduate" from a World Bank/IMF minimum 6 year program of economic adjustment - adjustment which has in many cases found to worsen living standards of the poor.

"When the World Bank and IMF announced the first debt plan in 1996, we said it was too little debt relief for too few countries, too late," said Gerry Barr, co-chair of the Make Poverty History campaign. "Now it is only too late, for too few".

At least 60 countries need immediate debt cancellation to have any hope of achieving poverty reduction targets. Other countries are suffering under the burden of odious debt, such as South Africa, for example, whose debt was largely incurred under apartheid.

"Canada and other governments are to be congratulated for their efforts in making this debt deal a reality, but the reality is that there can be no rest until the burden of conditionality is lifted from those who are suffering from it," said Barr.

For more information contact:

Pam Foster, Coordinator, Halifax Initiative Coalition, (613) 255-8558, pfoster@halifaxinitiative.org.

Katia Gianneschi, Media Relations, Make Poverty History, (613) 241-7007 ext. 311, katiag@ccic.ca.