The technical criticisms here are an essential part of now exposing its reformist nature.
Chris Burford
_________________________________________________
A series of very confusing numbers have been put by the G7 in its 18 June statement and by various finance ministries, suggesting that this cancels half or even two-thirds of total debt. The G7 statement talks of "the debt stock of countries possibly qualifying under the HIPC initiative [of] some US$ 130 billion in nominal terms". This figure is arrived at by excluding short term debt and by excluding publicly guaranteed private debt (which is included in HIPC calculation) and by excluding the debt of several HIPC countries which will still not qualify for debt relief even under the new Köln criterion. Jubilee 2000 does not consider this acceptable. The total debt of the 41 countries defined by the World Bank as HIPCs is $207 billion, while the total debt of the 52 countries highlighted by the UK Jubilee 2000 Coalition is $370 bn.
<>
Even the G7 finance ministers admit that "the final costs of the initiative are subject to many uncertainties." In practice, the figures given here are only estimates by the IFIs and finance ministries, and it is impossible to find detailed estimates for individual countries. Indeed, the IMF and World Bank have distributed estimates, but refuse to disclose how they are arrived at - even to governments. Frustrated finance ministries privately admit even they cannot check what the IMF and World Bank are saying.
<>
The G7 leaders say the Köln Debt Initiative "should be built on an enhanced framework of poverty reduction, developed by the IFIs in consultation with other institutions and with civil society."
The G7 finance ministers say: "Integrating their efforts, the World Bank and IMF should help qualifying countries with the drafting and implementation of poverty reduction plans for the effective targeting of savings derived from debt relief, together with increased transparency of budgetary procedures to protect social expenditure. Throughout program design and implementation, there should be consultations with broader segments of the civil society. Such dialogue will be the basis for deepening the sense of 'ownership' with governments and citizens in debtor countries when necessary adjustment programs are to be adopted."
<>
Increased debt cancellation has been won only at the price of increasing the power of the IMF. Debt reduction is even more strictly linked to ESAF, and the IMF and World Bank have been given the power to impose additional conditions on "poverty alleviation". The words "adjustment", "reform", "sound policies" and "good governance" a liberally sprinkled through the documents.
<>
The G7 finance ministers' statement implicitly recognises that the Köln Debt Initiative is largely about reducing the "stock" of debt and not the "flow" - the actual debt service payments. To reduce flow, the G7 finance ministers propose that "after the 'completion point', the IFIs could frontload debt stock reduction in a way to reduce debt service payments more strongly in early years."
But two press briefings by the British Treasury spokesperson in Cologne on 18 and 19 June both stressed that "the degree of reduction in debt service payments depends crucially on front loading, and thus on how much money is put into the Millennium Fund."
In effect, then, the Köln Debt Initiative itself will have relatively little impact on actual debt service payments for most countries. Instead, reducing actual payments will depend on private and government donations to the HIPC Trust and Millennium funds.
Joseph Hanlon Jubilee 2000 Coalition, London
23 June 1999