Fund-Bank conference ends, debt remains

by Gumisai Mutume

Prague, 28 Sept 2000 (IPS) - As the curtains fell at the World Bank and International Monetary Fund annual meetings, the Jubilee 2000 Campaign presented a monument of the globe to the leaders of the two institutions, to highlight their failure to make a significant move on cancelling the debt of the poorest countries.

The monument of the globe, signifying the bondage of the poorest people of the world, was presented to Bank president, James Wolfensohn, and IMF managing director, Horst Kohler, who responded by urging a “sensible approach” to debt cancellation.

“Jim Wolfensohn and I will be doing our utmost to ensure that debt relief is provided to as many countries as possible, as rapidly as possible under the Heavily Indebted Poor Countries (HIPC) Initiative,” Kohler told a press conference Thursday.

He said while many governors called for deeper debt relief “it is also clear that difficulties remain with the financing of the existing enhanced HIPC Initiative, and we need to focus on securing additional contributions so that no deserving country is refused assistance.”

Debt relief was one of the major themes that dominated this year’s World Bank and IMF board of governors Annual Meetings.

The 10-year-record high oil prices, stabilizing the international financial system, and reforming the Bretton Woods institutions were also dominant themes at this year’s meetings, punctuated by the most violent protests Prague has seen since the 1989 Velvet Revolution that toppled communism. “We are very disappointed with the outcomes of the meetings because, yet again, the creditors made absolutely no progress in debt relief at all despite overwhelming evidence that HIPC is failing,” Lucy Mathews of Jubilee 2000 told IPS.

Jubilee 2000 is an international NGO network calling for a complete scrapping of the debts of the world’s poorest nations.

Bank and IMF leaders reiterated a pledge to up the number of countries qualifying for HIPC by year-end from the present 10 to 20, freeing them of about 30 billion US dollars in debt.

But, the HIPC Trust Fund, created in part to assist the multilateral development banks deliver their share of debt relief has so far only received pledges and contributions of 2.6 billion US dollars.

Officials of the Bank and the IMF have been meeting in Prague since Sept 19, but ended proceedings a day early, described by watchers as a response to the estimated 5,000 protesters who went on a violent rampage, trashing the streets and leaving some 70 people injured.

At a press briefing Thursday Kohler and Wolfensohn were at pains to downplay that the meetings had been forced to close early by the protesters even though they gave no reason for the early termination to formal proceedings.

Wolfensohn said the institutions had learnt much during the last week through several engagements with civil society and “what we were looking for was discussion, not destruction.”

Protesters failed to storm the recently refurbished, 4,000-seat, Prague Congress Centre, built at the height of the communist era and strategically positioned on the edge of a valley to avoid seizure. It was also built to withstand nuclear attack.

Expectations had been high on the eve of the meetings that a major announcement from creditor nations would come out of Prague, simplifying the complex requirements for countries to qualify for enhanced HIPC.

While the rioters rampaged the streets, the board of governors welcomed current reforms taking place at the Bretton Woods institutions.

“Pledges by Wolfensohn and Kohler to turn the Bretton Woods institutions into listening institutions were welcomed by the board,” noted current board chair Trevor Manuel of South Africa.

However some members saw a need to turn the IMF upside down and create a body more representative of developing countries that are the biggest number of clients these institutions serve.

Africa in particular, Manuel noted, wants further discussions on the issue of equitable quotas, giving poor countries greater representation within the institutions.

Manuel crusaded for more votes on the IMF and World Bank boards of governors where the continent’s 43 members hold less than five percent of the vote in the 182-member IMF. The Group of 7 nations own about 45 percent of the vote.

“The membership has said it wants the IMF to stay strongly engaged with its poorest member countries,” says Kohler, signalling that they would press on with the Poverty Reduction and Growth Facility (PGRF) begun last year and increasingly criticized as giving the institutions too much power to manage development programmes of borrowing nations.

“I am getting very concerned about the increasing emphasis on governance issues in the Bretton Woods institutions, particularly the Fund,” says Katele Kalumba, Zambia’s finance minister.

“Governance issues are very tricky. They’re like moving targets. Unless we are very specific about what it is we’re talking about when we say governance issues, I would be very uncomfortable with that as a conditionality in any of the programmes with the Fund or Bank.”

The meeting also highlighted the rebound in the world economy following the financial crisis that began in Asia in 1997. The world economy is expected to grow by 4.7 percent this year. However the two institutions warned that unless a cap is put on the record high oil prices, growth could be threatened.

The meetings expressed fears that the high oil prices, which this month reached a 10-year high, passing the $37-a-barrel mark, would mitigate the next outbreak of global financial turbulence.

An Organisation of Petroleum Exporting Countries (OPEC) heads of states summit in Venezuela this week again pledged to bring prices to $28 dollars a barrel.

Earlier this month OPEC pledged to up production by 800,000 barrels a day from October to ease prices.-4751

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