International Debt Relief at Risk

FOR IMMEDIATE RELEASE Sept. 7, 2001CONTACT: Neil Tickner(301) 405-4622[email protected]

International Debt Relief At Risk

COLLEGE PARK, Md. - Current efforts to help the poorest nations deal with their crushing international debt may never benefit the poor, says University of Maryland political economist Melissa Thomas. Instead, the windfall - more than $20 billion in relief granted by the World Bank and International Monetary Fund (IMF) - will likely get sucked up by corrupt and inefficient governments.

Thomas argues that debt relief is moving too quickly to ensure adequate planning and enforcement. Political pressure is worsening the time crunch.

"There's reason to be very concerned," she says. "International pressure groups have won an important victory by focusing attention on debt and persuading donors to grant it. But the battle is only half won - recipient governments must do their part to make sure the poor get relief."

Pressure groups argue that onerous debt payments take away money desperately needed to provide services to the poor. According to Thomas, though, the underlying problem is that many of the governments simply lack the capability, or in some cases the motivation, to adequately plan and administer poverty-fighting programs. She points to a recent, little-publicized, report by the IMF and International Development Association concluding that none of the nations getting debt relief is even capable of tracking spending on poverty reduction.

In the September/October issue of "Foreign Affairs," Thomas lays out her argument for "Getting Debt Relief Right." Among her main points:

* Many of the recipient governments have a poor track record addressing the needs of the poor. They lack basic procedures of public financial management. Corruption is often widespread and many lack institutions of public accountability such as strong, honest and independent judiciaries and legislatures, public access to government information and clean and competitive elections.

* Debt relief advocates are pressing for acceleration - which has a perverse effect on the likelihood of benefits for the poor.

* Debt relief advocates must become involved in monitoring government compliance with conditions designed to ensure that the money reaches the needy. Advocates must insist that recipient governments do their part, with as much passion as they argued for donor forgiveness of debts.

Thomas concludes that debt relief is needed whether or not it has any impact on poverty. But pressure groups that do want to reduce poverty need to slow the clock, not speed it up. Debtor nations will need the time to make credible spending plans and put in place systems to manage funds - before they receive debt relief.

Thomas is a lawyer, political economist, and associate director at the University of Maryland's Center for Institutional Reform and the Informal Sector (IRIS). She has advised donors on corruption and governance issues in a number of heavily indebted poor countries.

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01163r, Tickner, 9/7/01