Session on Human Development Approach to Debt Sustainaibility:
An Assessment of the New Debt Sustainability Framework from the Perspective of Human Development Friday, April 21, 2006 / 10:45 am – 12:45 pm MEETING SUMMARY
The purpose of this session was to discuss the Bank and Fund Debt Sustainability Framework (DSF) which was adopted last year by the Bretton Woods Institutions in order to replace the debt relief and debt management criteria established under the HIPC Initiative. The Framework and its review come in the context of the Bretton Woods Institutions endorsement of the MDGs, as well as the Monterrey Consensus commitment that debt sustainability assessments should take into account financing requirements to fulfill the MDGs. The panel also discussed a paper produced by CIDSE entitled “The New World Bank / IMF Debt Sustainability Framework: A Human Development Assessment”. The session was sponsored by: EED, Afrodad, Latindad, CIDSE, Eurodad and Jubilee USA. Speakers included: Vitalis Mesha (AFRODAD), Aldo Caliari (Center of Concern), Peter Lanzet (EED), Damian Ondo Mañe (IMF Executive Director for Francophone Africa), Juergen Schmid, Policy Advisor to the German Executive Director, and Vikram Nehru (World Bank). The session was chaired by Gail Hurley (Eurodad). There were some 25 participants in the session. CSO representatives stressed that promoting human development (i.e. improved livelihoods, access to healthcare, and education), and reaching the MDGs should be at the center of the DSF, rather than debt repayment (also calling into question the idea of having separate frameworks for low-income and middle-income countries). CSOs have not been consulted adequately in the design and review of the program. Further, while the review document states that CSOs have alternative proposals, such as lowering debt sustainability thresholds, it does not describe them. Representatives from the Bank and Fund highlighted the fact that low-income countries often find themselves in a trap with little economic growth and large domestic debt. In these cases the DSF needs to focus on promoting job creation and economic growth. Governments need to be more transparent about their debt policies and CSOs should play a more active role in monitoring DSF policies at the country level. The issue of “free rider” countries also needs to be addressed in order to promote sustainable debt management by developing countries. Several important issues were brought up during the question and answer session. Rede Brazil and Jubilee South informed that they are doing an audit of debt levels in several countries and noted that they are having a difficult time getting information on debt levels. Another CSO participant called for more clarity on the criteria used by the Bank and Fund to define “shocks”, while another suggested that debt sustainability should be indexed to the MDGs. Finally, a participant asked why the Bank can’t build greater safeguards to prevent corruption. Bank and Fund participants agreed with the suggestion of indexing debt to the MDGs as well as costing out the MDGs, although the cost of undertaking this research effort would need to be covered by donor agencies. They also agreed the issues posed by commercial lenders and “vulture” creditors need to be addressed, though fell short of supporting the idea of a legal framework such as CSOs are calling for and which is similar to what has been established in the extractive industry sector. On the other hand, there was continued disagreement on whether the DSF is well suited for low-income countries and whether the human development goals are contemplated, in practice, by the Framework. List of participants in the discussion (will be posted soon) Photos from the session More Information:
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