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The World Bank and IMF to fight the global dialogue on “odious” and debt financing to monitor the failed in their vulture funds have, since, and draw his feet on the alleviation of the debt to Haiti and Liberia.

The World Bank published the draft report on the “odious” debt (defined as knowingly credit to a despotic power and not to interfere with the enjoyment of its population) in September 2007 (see Update 57). While the report acknowledged that “the objective analysis of irregular transactions and thought, that the lender knew of the use of resources,” there was no agreement on the fact that this is a good way classify public debt, there were still shall not constitute recommendations with regard to the odious debt.

Militants of the debt has been approved by the Bank in response to this document. It is not known what their reaction goals, and if the two sides were in dialogue on how to move the process forward. A round table is planned for the spring meeting of IMF-World Bank meeting in Washington in April.

During the discussions on debt heinous threw a glance back at the “lender” past practices, the question remains how to ensure that such behaviour in the future. Brussels-based network Eurodad has established for this purpose by the establishment of a charter for the financing charge, attempted hijacking of the institution or branch of responses to concerns about the granting of credit and the right solution to the debt crises in the direction of “internationally accepted legal standards of good lending and borrowing.

Apart from the technical and legal conditions and the conditions, the charter addresses the protection of human rights and the environment, the approval of the public and transparency, procurement and payment difficulties or disputes. On the thorny issue of human rights, the Charter provides that the measures should be financed not against the rights, as defined in the contracts, or to the borrower or the lender are signatories. Furthermore, the financing should not be in contradiction to the internationally recognized minimum standards of social security, employment and environmental protection. These include the Bank of protecting the IFC performance standards and the ILO core labour standards.

This is a fundamental difference of the Charter of Eurodad G20 discussions about responsible lending their own Charter. The G20 Charter, in particular driven by a rich country fears about growth in the granting of credit from China and India, by contrast, were, according to reports from Brazil, China and South Africa . A revised text will be discussed G20-ththe next meeting in Brazil in November.

Eurodad, the various Governments or authorities on a voluntary basis, to adopt the charter, and for the debate on the subject of the United Nations Charter as part of the financing for the development of processes for the next meeting in Doha November.

The African Network on Debt and Development (Afrodad) is fair and transparent debt arbitration Campaign, whose goal is the collection and dissemination of information on cases of debt odious and illegitimate in the world, for the establishment of a transparent mechanism for arbitration. Afrodad has already compiled ten dossiers, including Nigeria, Cameroon / Chad, Argentina and the Philippines. Afrodad, the organization of the national meeting in Nigeria and the Democratic Republic of Congo in April 2008, to inform, both locally and civil society groups and parliamentarians.
Vulture observe

To date, eleven countries, graduates of the Highly Indebted Poor Countries (HIPC), have been targeted by the so-called “vulture funds” (currently in Uganda, Nicaragua, Sierra Leone, Niger, Zambia and are covered). These companies buy to the “bad” debts at a discount, then try again the full amount, often by the introduction of the appeal by the courts. The commercialization of public debt, especially from the countries that participated in the debate with debt relief, offers an opportunity for the vultures-Fonds, as a free-drivers because they have the leeway Budget, by debt relief and loans for the Development Goals.

In January, a precedent in Belgium by the adoption of a resolution on “the protection of development cooperation and the exemption of debt of the action of vulture funds”. The legislation reflected in the clauses inserted in future bilateral agreements prevent it from using these means, and urges the international financial institutions, to ensure that initiatives for debt relief are binding on all parties. The Fund itself admitted, their vulnerability to regulatory measures decisive. Debt Advisory International, a complany, manages several funds vultures, said: “The impact of” zero tolerance “for the sale of sovereign debt vis-à-vis third parties for conversion or collection, is that they kill the secondary market for such claims, to resolve them, the buyers of last resort “.

During the year 2001, the IMF published a paper on the involvement of the private sector in the world of international finance law to solve and prevent financial crises. The short-vulture funds recognizes an obstacle for creditors nations to participate in debt restructuring through an additional opportunity to regain some of their credits. As an organization, the ears of the world on macroeconomic stability and the management of public finances, the IMF should be able, with a concrete proposal for the policy to the issue of vulture funds, in particular as regards their activities in the country HIPC.

For its part, the World Bank has not been so far, the activists for debt “Tender for the Development of International Development Association (IDA) to the reduction of the body. Installation lets HIPC countries through the takeover of their commercial debt at a discount, the Prevention of vulture funds from them.
Updates HIPC: Haiti and Liberia

The relationship between external debt and development have never been more pronounced than in the case of Haiti. Debt relief of $ 1.2 billion ($ 464 million, compared to those of the World Bank), and finally the completion granted, according to the HIPC program. The cost of non-fulfilment of the conditions of debt cancellation in the year 2009, the deadline is set at $ 44 million. From the viewpoint of the development, the central issue is the possibility for late fees, debt relief and debt servicing current Haiti, whereas in the HIPC program. According to the Bank of the Republic of Haiti, bar 1.2 billion, are considered debt relief amounts to more than a quarter of GDP in Haiti.

Liberia has $ 4.7 billion in external debt, of which $ 1.6 billion vis-à-vis multilateral institutions. In March, after several delays, the IMF attaches to Liberia, finally, the decision point and the status spent $ 952 million in financing. Liberia is currently under way within the IMF staff monitored programme aimed at strengthening the management of public finances. It took two years Liberia, to get to this point, and it can not hope to facilitate its debt, and it has a Poverty Reduction and Growth Facility (PRGF) for a bundle of years.

In January, the IMF has changed its rules, while for poor countries can begin the HIPC debt relief after the critical period, it was necessary to arrange Liberia’s residue clearance. Up to now, were required for an IMF programme of the HIPC initiative, qualification, but they could not begin as soon as the program of such a delay has been removed. However, countries in a position to obtain approval by the IMF of their economic policies and monitored by program staff, in addition to a loan from the IMF programme and interest on late payments can clearance at the same time. If this does not solve the problem of delays or unfair conditions, the debt relief that it is at least stop countries like Liberia waiting even longer before entering the HIPC relief of the debt.

This entry was posted on Wednesday, April 2nd, 2008 at 11:13 pm and is filed under Debt Relief. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.