Two problems have to be urgently addressed. The first is money. Last April, at the Group of Seven summit in Cologne, the industrialised countries agreed in principle to provide earlier and deeper debt relief under the clumsily titled Heavily Indebted Poor Countries Initiative. Some 35 poor countries stand to benefit. Many of these countries are currently spending more on repaying debts than they are on basic social services. In Tanzania, there are more than two million children out of school, and infectious diseases claim the lives of one child in every five. Yet the country spends more on debt than on health and education combined. The new debt relief framework could end this moral outrage. Unfortunately, having made the commitment to debt relief, the G7 is displaying a familiar reluctance to foot the bill.
When the IMF's powerful interim committee meets this afternoon under its new chairman, British Chancellor Gordon Brown, the financing of debt relief will figure prominently on the agenda. The additional sums required are small. The total financing gap is about $5bn - equivalent to a couple of months' worth of EU farming subsidies. Britain is the only G7 country to have put money on the table; and the Chancellor is now pressing the EU to put some of its unspent aid budget into the pot. Others have been more reluctant. The funding request sent by President Clinton to the US Congress had a lukewarm response, while France and Japan have adopted a "can't pay, won't pay" stance. The Chancellor should use his authority to demand a more constructive approach.
The second problem is how best to link debt relief to cutting poverty. But what are the most appropriate eligibility criteria for countries to receive debt relief? The answer to date has been simple: comply with IMF programmes. But, as a damning Oxfam report last week demonstrated, IMF programmes are part of the poverty problem. They have delivered slow growth, rising inequality and collapsing basic services. The Fund's obsessive focus on short-term monetary targets to the exclusion of wider human development concerns makes it, in its present unreformed state, unfit to act as the sole gatekeeper for debt relief.
Unless new approaches can be developed, and quickly, there is a real danger that the benefits of debt relief will bypass the poor. The United Nations Children's Fund (Unicef) has proposed one eminently sensible option. In place of making governments comply with IMF monetary targets, it wants to see them developing debt-for-development plans. Drawn up with bilateral donors, these would demonstrate a capacity to absorb savings from debt relief into a national poverty reduction strategy through investments in areas such as basic health and education. This approach makes sense. It would make it possible to integrate debt relief into a broader strategy for delivering on the international community's commitment to halve world poverty by 2015. The fact that IMF-World Bank staff are now seriously considering the Unicef proposal is testament to the strength of the international campaign to achieve a poverty-focused debt relief framework.
The financial cost to the rich world of resolving the debt crisis in poor countries is small. The human costs of failure to act are unthinkable. When finance ministers look at each other across the table in Washington today, they need to look beyond narrow budgetary concerns at the human face of the debt problem. And they need to say: Enough.Reuse content