Debt campaigners call for total write-off

A coalition of debt campaigners has welcomed a decision by the World Bank and the International Monetary Fund (IMF) to cancel half of Madagascar's debt, but has called for a total write-off of the money owed to the two financial institutions. "The problem is Madagascar is still too poor to service the rest of its debt. We have been calling for full debt cancellation of all the poor countries which fall under the HIPC [Heavily Indebted Poor countries] initiative," Ashok Sinha, coordinator of the UK-based Jubilee Debt Campaign told IRIN. Madagascar's total external debt stands at just over US $4 billion. During a three-day visit to Madagascar last week, World Bank President James Wolfensohn and President Marc Ravalomanana said at a joint press conference that the Bank and IMF would cancel two billion dollars of the country's debt when their respective boards meet this week. The boards are expected to announce the write-off following Madagascar's success in reaching HIPC completion point. Sinha pointed out that although all the members of the G7 (group of industrialised countries) had cancelled bilateral debts owed by poor countries, the World Bank had maintained it could only afford a 50 percent cancellation. The UK recently promised up to £100 million per year to cover the remaining 50 percent of the debts owed to the World Bank and the African Development Bank by around 30 poor countries, he added. The UK had also "risen to our challenge, and proposed a 100 percent cancellation of debts owed to the IMF by a number of countries, by selling some of the IMF gold reserve," Sinha noted. "Our other concern is: what conditions has Madagascar been asked to fulfil to be eligible for the cancellation? The IMF and the World Bank generally ask for budgetary control, implementing macroeconomic policies, pushing for privatisation - these polices affect the jobs of the poor in the country," he claimed. World Bank spokesman Jocelyn Rafidinarivo told IRIN that the decision to write off the debt had followed eight months of negotiations with the Malagasy government. One of the requirements had been the presentation in July this year of a Poverty Reduction Strategy Paper, with pledges of good governance and the economic development necessary for debt reduction under the enhanced HIPC initiative. Rafidinarivo said the other two conditions were an evaluation by the IMF of the country's macroeconomic indicators and an IMF/World Bank assessment. The HIPC initiative aims to achieve sustainable levels of debt for heavily indebted poor countries pursuing IMF and World Bank supported adjustment and reform programmes.