Debt relief: still failing the poor

Paper argues that many developing countries will still be spending more on debt than on basic education or health after receiving HIPC debt relief. It further states that the World Bank has used wildly optimistic growth projections for the 22 HIPC countries. Since revenue projections are linked to growth, revenues have been overestimated, and debt is likely to absorb much larger shares of government revenue than World Bank projections state.

Recommendations for the World Bank and IMF

• endorse the principle that no HIPC country which is serious about the 2015 goals should be denied the resources required to achieve them
• agree a new HIPC3 by the time of the annual meetings, and ensure that future debt sustainability criteria are linked to the financing requirements of the 2015 goals in indebted countries
• undertake an urgent debt sustainability analysis of all low-income countries, and widen the HIPC initiative to more countries such as Haiti, Nigeria, Georgia or Bangladesh
• agree to 100% cancellation of IMF and World Bank debt for HIPC countries which have illustrated that they can use the resources to deliver poverty reduction and where a 10 per cent debt service to revenue ceiling is insufficient to release enough resources

[Adapted from the author]