WTO Ministerial Section • Volume 2 • Number 19 • 25th May 1998

G-8 blasted for lack of progress on hipcs

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International development agencies last week were enraged by the level of commitment–or lack thereof, from the Group of Eight industrialized nations toward enhanced debt relief for the world’s poorest countries. 70,000 people marched on the G-8 Summit in Birmingham, England as part of the Jubilee 2000 campaign for debt relief, yet left disappointed as the G-8 failed to live up to expectations regarding the acceleration and expansion of debt relief.

The G-8, which includes the U.S., Britain, France, Germany, Canada, Italy, Japan and Russia, said in their communiqué that the group supports “the speedy and determined extension of debt relief to more countries, within the terms of the Heavily Indebted Poor Countries (HIPC) initiative agreed by the International Financial Institutions (IFIs) and Paris Club. . . We encourage all eligible countries to take the policy measures needed to embark on the process as soon as possible, so that all can be in the process by the year 2000. We will work with the international institutions and other creditors to ensure that when they qualify, countries get the relief they need, including interim relief measures whenever necessary, to secure a lasting exit from their debt problems.”

Development agencies take issue with the G-8 position on at least two fronts. First, the HIPC initiative needs to expand its eligibility requirements to allow more poor countries to be eligible for debt relief: for example the HIPC initiative utilizes a debt to export ratio that poverty fighting groups argue is too high from a sustainability standpoint. Second, tying debt relief to HIPC policy reform puts the burden for debt relief on the backs of the poor, while money for education and health in poor countries continues to service debt while reforms are made.

The G-8 responded to the Jubilee 2000 campaigners in a declaration on less developed countries. “Debt relief in itself is no magic solution; it can only be part of the answer to achieving sustainable development. Where a country shows a real will to pursue policies that will relieve poverty and build a sound economy, we will do our part and contribute the funds necessary to reduce their debt burden to a sustainable level. This will ensure that the resources freed up are put to good, productive use, generating growth and bringing real benefits–in the form of better education, better health, and sound, honest government– to the poorest people,” according to the declaration issued at the close of the Birmingham summit.

Andrew Simms of Christian Aid expressed his bitter disappointment in the G-8, saying, “It’s Groundhog Day for the world’s poor. Each year the G-8 pitches up promising to give meaningful debt relief to the poorest countries and each year they remain trapped in a world of aid dependency and disaster after disaster. [The G-8] has failed to understand that the target of halving world poverty by the year 2015 can only be met by more realistic debt relief; the kind of debt relief Germany received after the second world war.”

During a major conference on North-South relations and sustainability held this week in Bern, Switzerland, former President of Tanzania and current Chairman of the South Centre, Julius Nyerere, asserted that the debt to export ratio in the HIPC was unreal and, hence, unattainable.

”G8 Summit Final Communiqué,” May 17, 1998; “G8 Declaration on Less Developed Countries,” May 17, 1998; “Summary of G-8 Birmingham summit communiqué,” KYODO NEWS INTERNATIONAL, May 17, 1998; “Fury at G-8’s debt ‘failure,’” THE GUARDIAN, May 18, 1998.