Charlotte Denny
Uganda has added its voice to calls for an overhaul of the World Bank and International Monetary Fund’s (IMF) heavily indebted poor countries initiative (HIPC).
In a letter to British Chancellor of the Exchequer Gordon Brown, Ugandan Finance Minister Gerald Ssendaula called for speedier debt relief. Currently, countries must spend six years on an economic reform programme before qualifying for debt write-offs.
“Delaying debt relief deprives debtor countries of much-needed relief at a time when they are attempting to direct increased resources to poverty eradication,” notes Ssendaula.
HIPC cuts debts to levels the IMF considers sustainable – where the proportion of exports earnings spent on servicing debt each year is between 20% and 25%. Ssendaula says qualifying criteria should be based not on export earnings, but on how much of the budget is spent on interest payments.
He says the West has signed up to international targets for poverty reduction, but little thought is given to the financing of programmes that will ensure these ambitious targets are met.
“A debt can only be considered sustainable when sufficient resources are left after debt service has been paid, to ensure that these poverty eradication programmes are fully budgeted for.”