Mr. Sanneh.
You are most welcome, and thank YOU for the valuable articles you often
share with the list.  We can all learn a lot from each other.  I hope you
will inform us about the Prague meeting when you return!  Best, Ylva
Hernlund, WSAN

On Thu, 21 Sep 2000, sidi sanneh wrote:

> Ms Ylva Hernlund,
> Thank you for providing these valuable links, particularly the Oxfam
> contacts in Prague where I will travelimg to over the week-end to attend the
> IMF/WB Annual Meetings.  It is my intention to consult with NGOs such as
> Oxfam that are in the front-line of the Debt Relief campaign.
> Sidi Sanneh
>
>
> >From: Ylva Hernlund <[log in to unmask]>
> >Reply-To: The Gambia and related-issues mailing list
> ><[log in to unmask]>
> >To: [log in to unmask]
> >Subject: Africa: Debt Update (fwd)
> >Date: Thu, 21 Sep 2000 09:37:18 -0700
> >
> >---------- Forwarded message ----------
> >Date: Thu, 21 Sep 2000 09:14:55 -0500
> >From: APIC <[log in to unmask]>
> >To: [log in to unmask]
> >Subject: Africa: Debt Update
> >
> >Africa: Debt Update
> >Date distributed (ymd): 000921
> >Document reposted by APIC
> >
> >+++++++++++++++++++++Document Profile+++++++++++++++++++++
> >
> >Region: Continent-Wide
> >Issue Areas: +economy/development+
> >Summary Contents:
> >This posting contains excerpts from a press release by Oxfam
> >International with an analysis of the results of the Heavily
> >Indebted Poor Countries (HIPC) initiative to date, released in
> >advance of the IMF/World Bank meetings in Prague. Another posting
> >today contains a press release from the Africa Fund and statements
> >calling for debt cancellation from African-American religious leaders
> >and elected officials. For the full version of the Oxfam press release
> >and other related documents from Oxfam International, see
> >http://www.oxfam.org
> >
> >+++++++++++++++++end profile++++++++++++++++++++++++++++++
> >
> >HIPC leaves poor countries heavily in debt:
> >
> >Oxfam International
> >18 September 2000
> >
> >Oxfam International  ([log in to unmask]) is a network
> >of eleven aid agencies working in 120 countries throughout the
> >developing world: Oxfam America  ([log in to unmask]),
> >Oxfam-in-Belgium ([log in to unmask]), Oxfam Canada
> >([log in to unmask]), Oxfam Hong Kong ([log in to unmask]), Community
> >Aid Abroad ([log in to unmask]), Oxfam Great Britain
> >([log in to unmask]), Oxfam New Zealand ([log in to unmask]),
> >Intermon Spain ([log in to unmask]), Oxfam Ireland
> >([log in to unmask],[log in to unmask]), Netherlands Organization
> >for International Development Cooperation (NOVIB) ([log in to unmask]),
> >Oxfam Quebec ([log in to unmask]).
> >
> >Oxfam representatives are in Prague and available for interview or
> >comment: Seth Amgott From Czech Republic 0602 849 881 From abroad
> >+420 602 849 881 Arup Biswas From Czech Republic 0602 849 882 From
> >abroad +420 602 849 882
> >
> >Heavily Indebted Poor Countries (HIPC) Initiative leaves poor
> >countries heavily in debt
> >
> >Background
> >
> >The Heavily Indebted Poor Countries (HIPC) Initiative will figure
> >prominently on the agenda of the IMF-World Bank annual meeting in
> >Prague from 19-26 September. Nine countries are currently receiving
> >debt relief under the Initiative. Current plans are for this number
> >to rise to 20 countries by the end of the year. The stated aim is
> >to leave heavily indebted countries with a sustainable debt
> >profile, and to provide resources for poverty reduction. IMF-World
> >Bank staff reports, prepared for the annual meeting, have cited
> >large financial gains for the HIPCs amounting to over $28bn.
> >
> >Research carried out by Oxfam suggests these headline figures
> >grossly exaggerate the real benefits of the HIPC Initiative. In the
> >first in-depth analysis of the implications of the Initiative for
> >government finances, the research suggests that the annual budget
> >savings for most countries will be modest. Some countries -
> >including Senegal, Tanzania and Zambia - will emerge from the HIPC
> >debt relief process in the perverse position of paying more on debt
> >servicing. Debt repayments will continue to absorb a
> >disproportionately large share of government revenue, amounting to
> >more than 15 per cent in six countries, and to over 40 per cent in
> >Zambia, Cameroon and Malawi. All but three of the twelve countries
> >reviewed in the Oxfam research will continue to spend far more on
> >debt servicing than on health and primary education after they have
> >received debt relief.
> >
> >The picture that emerges from the Oxfam research raises fundamental
> >questions about the adequacy of the enhanced HIPC Initiative. While
> >the Initiative will significantly reduce both the stock of
> >unpayable debt and the amount that countries would have to pay
> >without debt relief, it does not go far enough. Far deeper levels
> >of debt reduction are needed to leave governments with the capacity
> >to finance basic services. Oxfam recommends that a 10 per cent
> >ceiling should be set on the proportion of government revenue
> >allocated to debt servicing.
> >
> >Part of the problem with the existing HIPC framework is its narrow
> >perspective on debt sustainability. Repayment capacity is currently
> >defined primarily in terms of the debt-to-export ratio. Oxfam wants
> >to see a more poverty-focussed approach to debt sustainability in
> >which human needs figure more prominently. It argues that more
> >weight should be attached to the budgetary burden of debt and the
> >diversion of public finances away from poverty reduction
> >initiatives.
> >
> >As a group, the heavily indebted countries suffer from some of the
> >deepest and most pervasive levels of poverty in the developing
> >world. Over half of the population lives below the $1-a-day poverty
> >line, one-in-six children die before the age of five from
> >poverty-related diseases, and almost 50 million children are not in
> >school. To demand that governments in these countries spend more on
> >debt servicing than on the basic health and education needs of
> >their citizens is economically irrational, morally unacceptable,
> >and at variance with the HIPC Initiative's proclaimed goals of
> >providing a poverty-focussed debt relief framework.
> >
> >The enhanced HIPC Initiative
> >
> >The enhanced HIPC Initiative adopted by the Boards of the IMF-World
> >Bank at the 1999 annual meeting, following the Group of Seven
> >summit in Cologne, aimed at accelerating and deepening debt relief.
> >Under the reformed framework, which marked a step forward, the
> >threshold targets for net present value of debt-to-exports has been
> >lowered to 150 per cent.
> >
> >Much has been made by the World Bank, the IMF and the wider
> >creditor community of the generosity of the new HIPC Initiative.
> >Headline figures suggest that the amount of debt relief provided to
> >a group of 32 countries will double to $28bn (in net present value
> >terms), reducing the average debt-to-export ratio by 41 per cent to
> >138 per cent at decision point, and to less than 100 per cent by
> >2005.
> >
> >Comparing post-HIPC Initiative debt servicing with the amount that
> >countries would have to pay in the absence of debt relief points to
> >significant benefits. For the nine countries expected to have
> >reached decision point, total debt service relief amounts to $9.1bn
> >- three times the amount projected under the original HIPC
> >Initiative. This figure will rise to $20bn if the target of debt
> >relief for 20 countries by the end of the year is achieved.
> >
> >Documents prepared for the annual meeting in 2000 highlight
> >dramatic improvements in the debt profile of the HIPCs. The
> >debt/GDP ration is projected to fall from 47 per cent to 28 per
> >cent, and the debt service ratio from 15 per cent to 9 per cent.
> >Scheduled debt payments will fall by $800m.
> >
> >Such indicators have been used to present a positive picture of the
> >enhanced HIPC Initiative, notably for media consumption.
> >Unfortunately, they tell only part of the story. In particular,
> >they fail to capture the impact of debt relief on government
> >revenue and budgets. Despite repeated requests from non-government
> >organisations IMF-World Bank staff have failed to provide any
> >assessment of the proportion of government finance that will be
> >diverted to debt servicing after debt relief. ...
> >
> >The debt relief deficit
> >
> >In an attempt to assess the real implications of the HIPC
> >Initiative for government budgets, Oxfam has analysed post-HIPC
> >debt service projections for 13 countries. Eight of these countries
> >have reached their decision point and benefit from assistance under
> >the enhanced HIPC framework. Another four are expected to received
> >enhanced HIPC support this year. The potential budgets effects of
> >debt relief were captured by taking the average annual level of
> >debt repayment projected for the three years after countries reach
> >decision point. This figure was then compared with government
> >revenue in the decision point year.
> >
> >The findings suggest that the benefits of the HIPC Initiative in
> >terms of reduced debt servicing will be significant for a small
> >group of countries, negligible for a larger group, and non-existent
> >for several:
> >
> >* Increased debt servicing for three countries. Zambia, Tanzania
> >and Senegal all face an increase in debt service payments. The
> >largest increase will be in Senegal, where debt service payments
> >will almost double to $171m, reflecting the large pre-HIPC
> >Initiative gap between scheduled and actual payments. In Zambia an
> >increase in repayment to the IMF will raise annual debt servicing
> >by $75m, or one-third.
> >
> >* Limited benefits for four countries. Debt service payments will
> >fall by less than 20 per cent for Burkina Faso, Honduras, Guinea,
> >Malawi, and Mauritania.
> >
> >* Significant savings for five countries. Debt servicing will fall
> >by 30 per cent or more for Bolivia, Cameroon, Mozambique, Rwanda
> >and Uganda.
> >
> >One of the aims of the HIPC Initiative is to release resources that
> >could be used to reduce poverty from debt servicing. Given the
> >limits imposed on revenue raising capacity by low average incomes,
> >and the huge scale of unmet basic needs, this is an important
> >objective.
> >
> >The data derived from the Oxfam research strongly suggests that
> >unsustainable debt will remain a formidable obstacle to poverty
> >reduction efforts. Debt servicing will continue to absorb a large
> >share of government revenue in most countries, amounting to
> >
> >* 40 per cent of total revenue in Zambia
> >* 25-35 per cent of the total in Cameroon, Guinea, Senegal and
> >Malawi
> >* 15-20 per cent in Honduras, Mozambique, Tanzania and Mauritania
> >* 13-14 per cent in Burkina Faso and Mauritania
> >
> >Implications for public investment in basic services and human
> >development
> >
> >The limited budget savings provided through enhanced HIPC
> >Initiative debt relief means that some of the world's poorest
> >countries will continue to transfer far more to their creditors,
> >than they are able to invest in basic services. ...
> >
> >[In summary]
> >
> >* there are eight countries in which debt service payments will
> >exceed the budgets for health and education
> >
> >* in five of these countries (Zambia, Tanzania, Senegal, Mauritania
> >and Cameroon) debt repayments will exceed the combined health and
> >education budgets after debt relief.
> >
> >It is difficult to square these public-spending outcomes with a
> >genuine commitment to a poverty-focussed debt initiative on the
> >part of the donor community. As a group, the heavily indebted
> >countries are massively off track for achieving the human
> >development targets set for 2015. These include the halving of
> >extreme poverty, universal primary education, and a two-thirds
> >reduction in child mortality. If current trends continue, each of
> >these targets will be missed by a wide margin. ...
> >
> >The prospective scenario for individual heavily-indebted countries
> >underlines the enormous human development costs implicit in the
> >debt service projections summarised above.
> >
> >Burkina Faso. Under the HIPC Initiative, Burkina Faso will continue
> >to allocate around 13 per cent of government revenue to debt
> >servicing, or around $40m per annum. This amount may appear small
> >from the industrialised world. But in a country where almost one in
> >four children die before the age of five from poverty-related
> >diseases, spending on debt will represent double the spending on
> >health. Debt servicing will also exceed the education budget, even
> >though Burkina Faso has among the world's lowest school enrolment
> >and adult literacy rates. Fewer than a quarter of girls attend
> >school.
> >
> >Zambia. In the three years after HIPC debt relief Zambia will be
> >allocating around 40 per cent of government revenue to debt
> >servicing - one of the highest levels in the world. These resources
> >are urgently needed for investment in poverty reduction. Zambia is
> >one of the countries worst affected by HIV/AIDs. Nearly 13 per cent
> >of children are orphans (the highest rate in the world), and child
> >mortality rates are rising. During the 1990s the proportion of
> >children suffering from chronic malnutrition has risen from 39 per
> >cent to 53 per cent. As in other HIPC countries, poor health and
> >education indicators are linked to wider patterns of deprivation,
> >with over half of the population living below the extreme poverty
> >line.
> >
> >Senegal. The newly elected government has committed itself to
> >ambitious reforms in health and education as part of a renewed
> >national commitment to poverty reduction. However, its capacity to
> >deliver on the commitments made will be compromised by foreign debt
> >servicing. Average debt repayment will be equivalent to double the
> >combined health and primary education budgets. There is now a real
> >danger that debt servicing will undermine the Quality Education for
> >All programme that aims to achieve universal primary school
> >enrolment by 2008. Although aid flows will partially compensate for
> >debt servicing, development assistance for education will represent
> >less than half of government debt repayments.
> >
> >Malawi. One of the few HIPC countries to have made rapid progress
> >in education: expenditure on education has doubled as a proportion
> >of GDP to 5 per cent, with a major redistribution in favour of
> >primary schools. Free education was introduced in 1994, leading to
> >an increase in enrolment of around 3 million by 1997. Health
> >spending has also increased. Despite these positive budget trends,
> >Malawi faces immense problems. There is an urgent need to improve
> >the quality of education and to increase the rate of transition to
> >secondary school. Several key health indicators - such as infant
> >mortality - have stagnated, partly as a consequence of HIV/AIDs.
> >Almost 5 million people live below the poverty line. With foreign
> >debt absorbing around one-quarter of revenue, government capacity
> >to address these problems will inevitably be curtailed.
> >
> >Tanzania. Having entered the HIPC Initiative this year, Tanzania
> >will continue to allocate over one quarter of government revenue to
> >debt servicing for the next three years. This represents more than
> >public spending on health and primary education in a country with
> >over 2 million children out of school, and with 186,000 under-five
> >child deaths each year.
> >
> >Wider problems
> >
> >Inadequate levels of debt relief is just one of the problems
> >associated with the HIPC Initiative. Despite repeated pledges from
> >creditors, the pace of implementation remains far too slow. There
> >are also growing concerns about gaps in the Initiative.
> >
> >There are several reasons for the slow pace of implementation. In
> >some cases, unrealistic conditions have been set under the IMF
> >programmes that eligible countries must comply with in order to
> >receive debt relief. In Honduras, for instance, debt relief has
> >been held up because of IMF insistence on more rapid progress in
> >the country's privatisation programme. In other cases, weak
> >management appears to have been responsible. Malawi could have
> >received debt relief in May had IMF and World Bank staff completed
> >their debt sustainability analysis earlier. The delay may cost
> >Malawi around $50m in interim debt relief, if it enters HIPC in
> >November as planned.
> >
> >Several countries potentially eligible for debt relief are affected
> >by conflict. Earlier this year the British Chancellor Gordon Brown
> >outlined an initiative aimed at using debt relief as an incentive
> >for peace and reconstruction. The recent cease-fire in the war
> >between Ethiopia and Eritrea provides an important opportunity for
> >the creditor community to put this commitment into practice.
> >Failure to provide Ethiopia with debt relief will leave the
> >government facing chronic public financing problems. Scheduled debt
> >service payments amount to 60 per cent of export earnings.
> >
> >HIPC initiative eligibility currently extends to a group of around
> >40 low-income countries. That group does not include Nigeria, which
> >is Africa's largest debtor. Nor does it include chronically
> >indebted lower-middle-income countries such as Jamaica. The next
> >phase of HIPC reform needs to develop strategies for extending the
> >debt relief remit to other countries where unsustainable debt
> >threatens poverty reduction efforts.
> >
> >An agenda for reform
> >
> >The enhanced HIPC Initiative is failing to realise its potential.
> >Urgent reforms are needed to deliver on the commitments made by
> >creditors to provide a permanent exit from the debt crisis. Failure
> >to act will undermine efforts to link debt relief to national
> >poverty reduction efforts.
> >
> >During the annual IMF-World Bank meeting in Prague Oxfam is calling
> >for:
> >
> >* A new approach to debt sustainability. It is fundamentally
> >unacceptable for countries suffering widespread extreme poverty to
> >spend more on debt servicing than they invest in the health and
> >education of their citizens. No country emerging from the HIPC
> >Initiative should be required to allocate an amount equivalent to
> >more than 10 per cent of revenue to debt servicing. IMF-World Bank
> >debt sustainability analyses should include projections for the
> >amount of government revenue to be allocated to debt servicing.
> >
> >* Immediate debt relief to countries which commit to a 'Poverty
> >Fund' in the Interim Poverty Reduction Strategy Paper (PRSP): There
> >is an urgent need to accelerate implementation of the HIPC
> >initiative, and to strengthen the linkage between debt relief and
> >poverty reduction. Current approaches have become unduly
> >bureaucratic, causing delay in the provision of debt relief. New
> >approaches to eligibility are urgently needed. At the decision
> >point governments should be broadly on-track with their
> >macro-economic programmes. But the key requirement for entry into
> >HIPC should be the development of a poverty action fund, detailing
> >how debt relief finance will be allocated to poverty reduction
> >initiatives. Implementation of the fund would be monitored by
> >government, civil society and donors. Obvious priority areas would
> >include health, education, rural roads, water supply and employment
> >generation programmes. Such an action fund was pioneered in Uganda,
> >where a Poverty Action Fund helped to finance Universal Primary
> >Education, basic health and rural feeder-road programmes. The use
> >of debt relief to eliminate charges for basic education and health
> >is one option with potentially large human development returns.
> >
> >* Immediate and generous debt relief for Ethiopia. There is now a
> >real opportunity for using debt relief to underpin the peace in
> >Ethiopia. Having already been assessed under the original HIPC
> >Initiative framework, Ethiopia should immediately be reassessed and
> >provided with debt relief geared towards poverty reduction.
> >
> >* The extension of the HIPC framework. IMF-World Bank staff should
> >review the debt sustainability of countries such as Nigeria and
> >Jamaica not covered by the existing HIPC framework, but facing
> >chronic debt problems.
> >
> >************************************************************
> >This material is being reposted for wider distribution by the
> >Africa Policy Information Center (APIC). APIC provides
> >accessible information and analysis in order to promote U.S.
> >and international policies toward Africa that advance economic,
> >political and social justice and the full spectrum of human rights.
> >
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> >
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