Help for the Poorest
Many poor developing countries have borrowed so much money from foreign governments, international institutions and private sources in the past three decades that they no longer can pay interests, much less repay the principal. The loans were meant to pay for social development programs, such as education and health care, but in some countries war, corruption, economic and natural disasters interfered, and people slipped deeper into poverty, while governments borrowed more to repay old loans.
Since 1996, an initiative by the World Bank, International Monetary Fund and private and religious groups to reduce unmanageable debts has been building. Last month, the Clinton administration announced it was willing to forgive loans Washington had extended to the poorest developing countries. The indebted nations hope that other lender governments will join the drive to give them a chance to overcome crushing poverty.
Major lenders have declared 41 countries, most of them in Africa, Highly Indebted Poor Countries, or HIPC countries:
The lenders' 1996 initiative aims at wiping off the books about two-thirds of the crippling debts by the end of 2003. To qualify, the indebted countries must commit themselves to reforming their economies and channeling funds into health care, education and poverty reduction projects. For the initiative to succeed, however, individual governments that have extended loans directly to developing countries also must forgive part of those debts.
The debt burden and planned reduction:
Current value of external debts by the 41 countries: $90 billion
Relief from "Paris Club" of major government-to-government lenders: $19 billion.
Relief from World Bank/IMF/other development institutions under HIPC program: $27 billion.
Potential future government-to-government relief; could go as high as $30 billion: $25 billion.
Remaining debts that could still be reduced or forgiven: $19 billion.
SOURCES: World Bank, International Monetary Fund, Jubilee 2000, National Conference of Catholic Bishops/U.S. Catholic Conference