HIPC

HIPC (Heavily Indebted Poor Countries) initiative Proposed by the World Bank and the IMF in 1996, and extended by a meeting of finance ministers of the G7 meeting in Cologne in 1999. It proposed debt relief for the 42 poorest countries which had ‘unsustainable debts’ if they met a number of criteria, which included stable government structures and stable budgets in which the gains from debt relief would be invested in education and social spending. Although welcomed by many non-governmental organizations, it was criticized as not being the breakthrough claimed by politicians. The classical criteria for economic stability were criticized, as they had not worked in the past. The G7 criteria for the ‘sustainability’ of debt (according to ability to pay, not the need to develop) have also been criticized. Finally, the mechanisms by which countries were to qualify were accused of being heavy-handed and slow. In total, the HIPC initiative provided for a total relief by almost 50 per cent of the debt owed by HIPCs, which amounted to around $110 bn. By June 2002 only six countries (Mozambique, Burkina Faso, Uganda, Bolivia, Tanzania, and Mauritania) had successfully completed qualification for full debt relief under the HIPC initiative. The majority of HIPCs continued to struggle with the conflicting aim of economic parsimony to meet debt repayments and institutional stabilization.

http://www.jubileeresearch.org, http://www.worldbank.org/hipc