Bretton Woods Institutions

Issue Brief: Conditions for debt relief (May 1999)

...what the World Bank and IMF require, and how it hurts the poor
The World Bank and IMF adopted new rhetoric about reducing poverty, and linking debt relief primarily to poverty actions in the fall. But countries entering the debt relief process are still facing the same old conditions that have nothing to do with poverty reduction, and can actually increase the hardships of the poor.

Guinea - Conditions for debt relief include: privatization of energy, privatization of telecommunications, deregulation of petroleum prices, removal of subsidies for public transportation (December 1999).

Honduras - Conditions for debt relief include: privatization of telecommunications, liberalization of mining sector, implementation of bank service fees (November 1999).

Here is what these kinds of "structural adjustments" have done, and are still doing, to the poor:

Mythologies of debt relief

Four \myths\ of debt relief were outlined in an article written in The Guardian in November, 1998, by Jack Boorman, Director of the IMF�s Policy Development and Review Department.

The following information dispels these arguments maintained by the IMF surrounding debt relief.

As the IMF delays and minimizes debt relief available through the HIPC Initiative, it is using the program to increase its control of national economic policies and creating myths to justify its actions�

ESAF - No Solution to Multilateral Debt

The International Monetary Fund and the World Bank have proposed a framework of action to assist in resolving the debt problems of heavily indebted poor countries. In the current formulation of this framework, replenishment of the Enhanced Structural Adjustment Facility (ESAF) has been presented as the centrepiece of the IMF contribution.

The IMF role was described in the brief prepared by IMF and World Bank staff for the April 23, 1996 meeting of the Development Committee:

"The IMF would also be expected to take action that would reduce the present value of its claims on a country, consistent with broad and equitable participation in the framework of this initiative. Various possibilities involving support under the ESAF which might achieve this objective are currently under examination."


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