HIPC has not Delivered

The IMF-WB sponsored Highly Indebted Poor Countries (HIPC) initiative meant to provide debt relief to developing countries has failed to deliver. Instead HIPC has left many developing countries committing scarce resources to debt servicing instead of meeting the needs of their people, the majority of whom live in desperate poverty.

This is the conclusion of 44 participants representing eight African countries and several major Jubilee cooperating partners from the North who gathered in Lusaka, Zambia, 8 and 9 October 2002 to address the question, “Will the Current Creditor Arrangements on Debt Make a Difference?”

The meeting decided that the experiences of the impact of HIPC on developing countries answers that question with a resounding NO! To them, HIPC has failed to make a difference primarily because its focus is on economic measures to assure continued debt servicing rather than on social measures to meet the enormous needs of the poor.

Other related reasons for HIPC’s failure were placed at the door step of debt sustainability estimates that are based on unrealistic estimates of economic growth (e.g., increased trade); the conditionalities it imposes are replays of the discredited elements of the Structural Adjustment Programmes (SAP).

They also argued that it lacks an impact assessment of what is actually happening through its implementation while both the International Financial Institutions (IFIs such as the World Bank and the IMF) and African governments fail to practice good accountability regarding priority setting, management and expenditure practices.

Recent reports and meetings of the Boards of the World Bank and the IMF in Washington DC also suggest that these institutions are not in fact interested in the reform of HIPC. They dwell on how they can simply increase the funds available for its implementation, which is not a realistic approach to debt relief.

It is also inconsistent with their stated objective of meeting the Millennium Development Goals (MDG) of cutting the levels of poverty in half by 2015.