Guyana will benefit from new debt relief pact -- Ambassador Ishmael Guyana Chronicle September 30, 1999 GUYANA's Ambassador to Washington, Dr. Odeen Ishmael yesterday confirmed that Guyana is expected to benefit from the historic debt relief announced this week by the multilateral financial institutions. Dr Ishmael told the Chronicle that specifics from the current meetings in Washington are sketchy, and that no country was mentioned. However, as a member of the Heavily Indebted Poor Countries (HIPC), Guyana will come in for debt relief. President Bharrat Jagdeo is currently in Washington holding a series of meetings with the International Monetary Fund (IMF) and the World Bank. A World Bank report out of Washington Tuesday, indicated that as many as 19 of the world's poorest countries would be placed on the fast track to debt relief after leading finance ministers put the finishing touches to a US$23 billion assistance package. Wrangling over contributions from rich countries to a trust fund designed to ease the debt burden continued Monday amid growing confidence that enough money would be raised to bring the number of qualifying countries up to 26 from seven by the end of next year. The first beneficiaries of the enhanced Heavily Indebted Poor Countries (HIPC) debt relief initiative will be Nicaragua, Tanzania, and Mauritania, which have already been assessed and are awaiting the go-ahead. Ethiopia and Guinea Bissau also have been assessed, but the funds could be held up by internal political strife. The final pieces of the jigsaw were put together at a meeting of the World Bank's Development Committee on Monday. With the IMF's US$3 billion contribution already secured from the revaluation of IMF gold, the United Kingdom (UK) and other countries put pressure on rich countries which were more reluctant to come forward. The European Development Fund (EDF) is prepared to provide US$700M; the United States is pledging US$600M; the United Kingdom US$221M; and Germany US$75M. United Kingdom officials said bilateral contributions have already surpassed the US$2 billion target. Britain's Chancellor of the Exchequer Gordon Brown and Secretary for International Development Clare Short believe that a key to the success of the enlarged HIPC scheme will be the new focus on linking debt relief to poverty reduction, with the income created to be earmarked for hospitals, schools, and basic services. "I really believe we're there," Agence France-Presse quotes World Bank President James Wolfensohn as saying. The shortfall was now "small enough that I am personally not worried about it", he said, and the programme would be launched. But Wolfensohn warned that the HIPC deal was only "the beginning of the solution...if you declare victory and think that by forgiving debt, you've dealt with poverty, you're crazy", he said. "I do honestly believe that you can run a tremendous risk by focussing everything on debt," because reducing poverty also requires continued new loans for development and improved economic policies in poor countries, Wolfensohn stated. Development charities yesterday renewed their criticisms of the debt relief process. An announcement that money had been found for the process was expected after the Development Committee meeting, but NGOs said some countries had been slow in coming forward with contributions and that the process was intrinsically flawed. The European Network on Debt and Development said it was an error to make adherence to an IMF structural adjustment programme, now renamed the poverty reduction and growth facility, a prerequisite for receiving debt relief. Debt cancellation should be conditional only on how the freed-up money was spent, and this should be monitored by the governments concerned, the network said. Meanwhile, plans to revalue part of the IMF's gold reserves to fund debt relief for the world's poorest countries are now in the hands of the US Congress, AFP reported IMF officials as saying. The Fund's policy-making Interim Committee on Sunday endorsed plans to revalue up to 14 million ounces, or some 14 per cent, of the IMF's gold reserves to fund the IMF's share of the HIPC initiative, but the move still needs approval by 85 per cent of the shareholders on the IMF board. And since the US has 17 per cent of the vote, its support is vital. A © page from: Guyana: Land of Six Peoples