G8 debt promises about to be broken by International Monetary Fund

Published: 19 December 2005

Washington DC: Six of the eighteen countries promised a 'historic' debt deal could have their hopes dashed by the International Monetary Fund at its board meeting on Wednesday December 21, Oxfam has learned. In July the G8 announced total cancellation of all the eighteen countries' debts to the International Monetary Fund (IMF), the World Bank and the African Development Fund. The IMF is now set to take up to six countries off this list and only approve countries that pass its own further, strict economic policy tests.

Washington DC: Six of the eighteen countries promised a 'historic' debt deal could have their hopes dashed by the International Monetary Fund at its board meeting on Wednesday December 21, Oxfam has learned.

In July the G8 announced total cancellation of all the eighteen countries' debts to the International Monetary Fund (IMF), the World Bank and the African Development Fund.

The IMF is now set to take up to six countries off this list and only approve countries that pass its own further, strict economic policy tests. Strong information obtained from a number of sources before the  meetings show that debt relief is in jeopardy for six of the 18: Ethiopia, Madagascar, Mauritania, Nicaragua, Senegal and Rwanda.

The IMF argues that, as some countries completed the initiative some years ago, a further spot-check  is now required. Max Lawson, Policy Advisor at Oxfam, said that: "This means millions of dollars that these countries could spend on schools and hospitals will now be delayed until they dance to the IMF tune.

"This latest maneuver by the IMF is an underhand attempt to impose privatization and further economic liberalization on countries that have already been promised debt cancellation," said Oxfam's Lawson.

"It seems somewhat unbelievable that the IMF is now boldly undoing the debt deal announced by the G8 and agreed at its own annual meetings in September. That they are trying to get away with secretly slashing the deal despite the public agreement earlier this year is scandalous," Oxfam's Lawson said.

The IMF is planning to stall the debt cancellation for some countries that may be forced to raise electricity prices or undertake further privatisation and cuts in public spending before getting the promised funds, according to Oxfam.

"Once again poor countries could have their hopes dashed.  Having fulfilled internationally agreed conditions for debt cancellation they could now find that the goal posts have been shifted," Oxfam's Lawson said.


Editors notes

  1. The cancellation announced by the G8 this summer was offered to those countries that have already completed the Heavily Indebted Poor Countries initiative. This scheme has already required them to meet many onerous economic policy conditions over several years.

  2. Under the G8 in July and the World Bank and IMF agreement from September's annual meetings, the following HIPC 18 countries would be eligible immediately: Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania, Uganda, Zambia.

  3. The remaining HIPC 20 countries would be eligible eventually, bringing the total number of eligible countries to 38: Burundi, Cameroon, Chad, Democratic Republic of Congo, The Gambia, Guinea, Guinea-Bissau, Malawi, São Tomé Príncipe, Sierra Leone, Central
    African Republic, Comoros, Republic of Congo, Côte d'Ivoire, Lao PDR, Liberia, Myanmar, Somalia, Sudan and Togo.

  4. The G8 / IMF and World Bank and African Development Fund deal is worth a total of $880 million a year or a total of $40.7 billion for the first 18 countries to qualify. If all 38 countries eligible receive debt cancellation from the World Bank, IMF and African Development Fund the deal is worth around $56.7 billion in total.

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