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1. Overview
Two different aspects of debt were discussed by the IMF and World Bank

a) Low income country debt and the Heavily Indebted Poor Countries Initiative

b) IMF proposals for a new debt plan to tackle debt owed mainly by 'middle income countries'.

2. Low Income Countries' Debt

The IMF and World Bank's latest progress report on the Heavily Indebted Poor Countries' Initiative (September 02) shows that this is still failing badly:

• Debt reduction is still being held up for many countries because they are not meeting the long list of conditions laid down by the IMF and World Bank
  
  
• Half the countries which are going through the HIPC will not receive the full amount of debt reduction promised

In spite of this indictment , the IMF and World Bank came up with no new proposals. They merely restated the G8 agreement made at their Summit in Canada to find another $1bn to fund the agreed debt reduction under HIPC.

G8: Haven't Paid Up

The G7 promised back in June at their Summit in Canada to pay their share of the extra $1bn needed to fund the HIPC. None of them has yet paid a cent. They promised to announce how much they will contribute in the unspecified 'near future'.

Heavily Indebted Poor Country Governments: 'Promises without Progress'

Heavily Indebted governments meeting in Washington were clearly concerned at the lack of urgency shown by the G8, IMF and World Bank. They highlighted

• the delays in receiving debt reduction
  
  
• the heavy load of conditions they have to fulfill (e.g. cutting their budgets, privatising electricity). They called for the likely effects of these conditions on poverty to be assessed first. The IMF and World Bank claim that all their policies aim at reducing poverty. But they do not examine the likely effects of their policies before they make them a condition for countries to fulfill.
  
  
• That HIPC will not reduce their debt sufficiently
  
  
• That rich countries and institutions like the IMF and World Bank are not meeting their commitments: they called this: Promises without Progress.

The IMF, World Bank and G8 are clearly hoping that if they sit tight debt campaigns will run out of steam and they won't have to come up with any further action on the debt. The
challenge for us is to stick our heels in and let them know we're still here, still demanding a fair and speedy solution to the debt crisis.

2. IMF's New Plan to deal with debt

Reports in the media, (eg. the Irish Times Monday 30th Sept.: 'IMF to Develop Radical Debt Plan') may have given the impression that a total rethink on the debt issue had taken place. The new IMF plan will deal with the debt of 'better off' developing countries (e.g. Argentina, Mexico, South Korea, and Thailand) when they suffer financial crises like the Asian crisis of the late l990s. The IMF want to avoid the situation where they have to come up with $billions to bail out private sector lenders as they did during the Asian crisis. Under their new plan, these lenders would have to come to an agreement between themselves to reduce the debts of the country in crisis. An independent body would oversee this agreement.

The IMF's proposal may sound similar to debt campaigners' call for a fair and independent process to deal with debt. But there are significant differences. The IMF's plan:

• is not aimed at cancelling unpayable debt i.e. debt which can only be paid at the cost of the health, welfare and future of the people of the indebted country
  
  
• will not deal with 'illegitimate' debt i.e. debt lent to oppressive regimes (e.g. lending to Argentina's military regime of the l970s)
  
  
• will not deal with debt owed to the IMF nor the World Bank and may not deal with debt owed to individual countries
  
  
• will not give the people of the indebted country a voice in the proceedings
  
  
• will not put an independent body in place to make decisions. Decisions will be made by majority vote of the private creditors. The independent body's role will be to organise and oversee the process.
  
  
• will not deal with the debt owed by low income countries (e.g. Nicaragua, Zambia, Cambodia)

The next stage: The IMF's proposal has been under discussion for almost a year. The next step is for a concrete proposal to be put to the IMF meetings in Spring 2003.

Campaigning opportunity: We will have an opportunity to urge the Irish government to press the IMF to ensure that any new debt plan involves a truly independent process and makes human development central to decisions on debt reduction.

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