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Urgent Action - Debt Deal At Risk

The IMF and World Bank hold their annual meetings this weekend (24-25 September) and reports suggest that the debt cancellation deal agreed by the G8 at Gleneagles in July may be at risk.

Several European countries in the IMF (Belgium, Norway, Switzerland and The Netherlands) oppose full implementation of the G8 commitments on the grounds that they:

    * oppose further debt cancellation without conditions;
    * want the cancellation implemented in phases, rather than immediately as the G8 agreed.

The G8 debt deal was modest enough, and now even the small gains it represented may be reversed. It offered multilateral debt cancellation (debt owed to the World Bank, IMF and Asian Development Bank) for countries that have already reached ‘completion point’ in the HIPC process. For the 18 countries which are immediately eligible (and which, as part of the HIPC process, have already met the discipline of 6 years of IMF-directed macroeconomic and policy conditions) this would mean cancellation of around US$40 billion of debt, and reduction of annual debt service by over US$1 billion per year.

Take Urgent Action
Email the Treasurer
The Treasurer, Peter Costello, is Australia’s governor in the IMF. Visit his website and send him an email calling on him to strongly promote the full implementation of the Gleneagles commitment on debt cancellation.

Here are some points you could make:

    * The Gleneagles debt cancellation commitment will provide urgently needed funds for development for 18 heavily indebted poor countries if it is implemented immediately and in full. Delays are unacceptable.
    * To reach HIPC completion point, these countries have already met strict governance and macroeconomic policy conditions and have developed national poverty reduction strategies - no further conditions should be imposed before they are able to receive the benefit of multilateral debt cancellation.
    * More countries need debt cancellation if they are to achieve the MDGs - the 62 poorest countries pay over US$10 billion in debt service each year.
    * Funding commitments for debt cancellation must be completely additional to aid spending.

Links
Eurodad (European Network on Debt and Development) is a network of development NGOs working for national economic and international financing policies that achieve poverty eradication and the empowerment of the poor. This is where to start for quality analysis of debt and financing for development.

Ben