IMF writes off poor nations’ debt

The International Monetary Fund has agreed to cancel $3.3 billion  owed by 19 of the world’s poorest countries, after reports that it was back-tracking on the debt-relief plan sparked an outcry.

The G8 agreed in July to cancel the debts of 18 nations
The G8 agreed in July to cancel the debts of 18 nations

The IMF, which had previously said it wanted one last “spot check” of the nations’ economic policies, said its board had now approved them for relief under a global debt cancellation plan unveiled by the G8 powers.

“We are on track to deliver 100% debt relief within the coming weeks to 19 of the 20 countries,” Thomas Dawson, the IMF spokesman, told reporters on Wednesday after a two-hour board meeting chaired by Rodrigo Rato, the managing director.

The Group of Eight powers in July had announced their plan to cancel the debts of 18 of the world’s poorest countries owed to the World Bank, the IMF and the African Development Bank.

The IMF added two countries to the G8 list of 18 – Cambodia and Tajikistan – but dropped one, Mauritania.

Dawson said the IMF hoped to qualify Mauritania in the coming months after reviewing its public spending plans.

Anti-poverty trust

Countries approved for debt relief:

  • Benin
  • Bolivia
  • Burkina Faso
  • Cambodia
  • Ethiopia
  • Ghana
  • Guyana
  • Honduras
  • Madagascar
  • Mali
  • Mozambique
  • Nicaragua
  • Niger
  • Rwanda
  • Senegal
  • Tajikistan
  • Tanzania
  • Uganda
  • Zambia

He said the $3.3 billion in debts owed by the 19 nations will finally be cancelled once the IMF has the approval of all 43 rich countries that have contributed to an anti-poverty trust set up by the Fund.

“So far, we have 37 consents. We’re quite hopeful we’ll get remaining the six in the next few weeks,” Dawson said.

Asked to name the six trust fund holdouts, he said: “We’re not in the name and shame game at this point. We view this as something we need to get done but not, quote unquote, a problem.”

Along with Cambodia and Tajikistan, the 19 countries set to benefit are Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania, Uganda, and  Zambia.

Debt-relief campaigners had caused consternation among some of the intended recipients by warning that the IMF was set to drop six countries from the list because their macro-economic policies did not conform to Fund dictates.

Their warnings prompted a letter to Rato from six US lawmakers last week expressing deep concern that the IMF was “back-tracking” on the commitment announced to great fanfare by the G8 nations.

Decision welcomed

Dawson said the IMF board had given in-depth study to each of the 19 recipients but dismissed the speculation as “simply not true”.

Activist organisations say theircampaigns for debt relief paid off 

Activist organisations say their
campaigns for debt relief paid off 

“Life is too short for me to try to be figuring out where inaccurate news stories are coming from,” he said when asked to explain what had got campaigners so alarmed.

Oxfam, one of the activist organisations that complained forcefully against rumours of an IMF U-turn, welcomed Wednesday’s board verdict.

Max Lawson, the organisation’s policy advisor, said,  “it’s good that the IMF realised that they couldn’t wriggle out of promised debt cancellation during a closed-door session in Washington DC.”

“The IMF must now deliver the funding quickly and without any further delay.”

Neil Watkins, the national coordinator of Jubilee USA, said: “Pressure from debt campaigners across the US and the globe and supportive governments led to this important reversal.” 

Source: AFP

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