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Monday, 18 September, 2000, 11:32 GMT 12:32 UK
Debt protest stepped up
Jubilee 2000 campaign
Jubilee 2000 campaigners want to see debt cancelled
Campaigners have called on the International Monetary Fund (IMF) and the World Bank to write off all the debts owed to them by the world's poorest countries.

Currently, the IMF and World Bank plan to write off about one-third of the debt owed to them by these countries.

But this isn't enough, says campaign group Jubilee 2000, which disputes the lenders' arguments that they can't afford to write it all off.

Campaigners are likely to converge on Prague this week, where the IMF and the World Bank are holding their annual meetings.

Wiping the slate clean

The campaigners argue that if the World Bank drew on half its reserves, some $14bn, it could write off the debt.

But the World Bank - a frequent borrower in the international capital markets - fears that if it did halve its reserves, the influential international credit rating agencies would consider it to be less credit-worthy and downgrade its ratings.

This in turn would make it more expensive for the World Bank to borrow money to finance projects throughout the world.

But Jubilee 2000 cites a report by Moody's Investor Services that says the World Bank could halve its reserves without harming its credit rating.

Healthcare not debt

The IMF and the World Bank launched the Highly Indebted Poor Countries (HIPC) initiative in 1996.

The scheme has faced criticism for its delay in granting debt relief. So far, only 10 of the 41 eligible countries have qualified for any debt relief.

The IMF has said it wants to speed up the process and hopes that 20 countries will have been approved for debt relief by the end of this year.

Unlike the IMF and the World Bank, G7 countries have promised to write off all of the debt.

The UK took a lead on international debt relief last December when it announced the cancellation of all bilateral debt owed by the world's 41 poorest countries.

"The miserly one-third cancellation currently on offer [from the IMF and World Bank] will still leave poor countries spending more on debt than on healthcare," Anne Pettifor, the head of Jubilee 2000 said.

"The World Bank and the IMF can cancel 100% of the poorest countries' debt and their G7 puppet masters should make them do it," she said.

This scheme has also come under fire from the charity Oxfam.

"For some countries, the debt relief lifeline threatens to become a noose, strangling large chunks of poor countries' budgets. The debt package urgently needs root and branch reform," said Oxfam's Kevin Watkins.

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14 Sep 00 | Business
Speeding debt relief
20 Jul 00 | debt
Q & A: Dropping the debt
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