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Rich nations must finish debt relief job-campaign

Rich nations must finish debt relief job-campaign

Leaders of the world's richest nations should finish the work they started on debt relief for poor countries before switching their focus to health problems such as AIDS, debt campaigners said on Monday.

The normally high-profile issue of debt relief was overshadowed at the weekend IMF/World Bank Spring meetings by concerns over the global economy and a new global health fund to tackle AIDS, malaria and tuberculosis.

While welcoming the AIDS initiative, which could eventually result in a multibillion dollar war chest to fight the disease and encourage research into drugs to treat it, debt campaigners said it would be undermined as long as the countries it aimed to help remain burdened by heavy debt payments.

Without adequate infrastructure such as roads, clinics and adequately trained medical staff, new treatments for diseases like AIDS simply won't get to the people that need them, said Adrian Lovett, director of UK-based Drop the Debt campaign.

"What debt relief does is support the budgets of these countries...It is debt relief first and foremost and most effectively that can put that infrastructure in place," he told a news conference.

"If they're focusing on global emergencies such as AIDS, they need also to finish the job on debt cancellation in order to ensure that the potential of this great movement for debt cancellation is not wasted," he added.

Launched in 1996, the Heavily Indebted Poor Countries (HIPC) initiative was supposed to bring far-reaching debt relief to the world's 41 poorest countries, freeing up cash to spend on health and education.

The effort caught world attention, largely thanks to public backing from high-profile personalities like U2's Bono and Pope John Paul, but progress has been modest, campaigners say.

DENT PAYMENTS STILL HIGHER THAN HEALTH SPENDINGOnly 22 countries have reached the so-called "decision point" where they start to receive some relief on debt-servicing payments and only one, Uganda, has had any of its debt written off.

What's more, many of the countries that benefit from the HIPC scheme will still end up spending more on debt than on health.

Debt campaigners lay the blame for this at the doors of the World Bank and the IMF. Unlike the wealthy Group of Seven industrial nations, the two global lenders have only agreed to cancel around half of HIPC debts rather than 100 percent.

Ministers gathered at the Washington meetings did voice some concern that the original goal of the HIPC initiative to lower debt payments of the poorest nations to "sustainable levels" was not being realized.

"We are very concerned that the recent IMF and World Bank report on debt sustainability shows this may not be the case for some countries, and we must address this vital issue," Britain's Chancellor of the Exchequer Gordon Brown said in his keynote speech.

World Bank President James Wolfensohn said the levels of debt that HIPC countries had to pay could be reviewed at a later date to take account for any deterioration in their economic situation.

But such comments failed to satisfy the debt campaigners.

"There's an inescapable conclusion that deeper debt cancellation is needed and that we think has been implicitly acknowledged," Lovett said.

"What these finance ministers and these decision-makers haven't yet faced is how they are going to do it, and when they are going to do it."


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