The joint World Bank-IMF debt relief plan for the worlds poorest countries is in danger of collapse, putting the lives of over 3m children at risk, Oxfam International, warned on Thursday.
In a report published in advance of next weeks spring meeting in Washington of the Bank and the Fund, Oxfam accuses the boards of the two institutions of lacking the political will to implement the initiative they agreed to last year.
Although the first two qualifying countries, Uganda and Bolivia, have well established track records of economic reform, they will have to wait at least a year before benefiting from the plan. Most other candidates for debt relief will be placed on the back-burner until 2000 and beyond, says the report by Oxfam International, the development agency which has national offices in 10 countries, including Britain, Canada, Ireland and the US. Oxfam calculates a one year delay will cost Uganda debt relief worth $193 million, (119 million), six times total government spending on health.
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The same delay will cost Bolivia $241 million, double its national health budget. Were these and other highly indebted African countries able to put funds that could be made available under debt relief into health services, says Oxfam, the lives of over three million children under the age of five would be saved over a seven-year period. One of the primary concerns of the Fund has been to minimise the costs to itself of financing debt relief, placing narrow institutional self-interest over the needs of the worlds poorest countries.
The main challenge, however, is directed at James Wolfensohn, president of the World Bank. Although Oxfam gives him credit for his personal commitment to debt relief, it claims that Wolfensohn is now failing to drive the initiative forward. This perception would change if he took a principled stand on behalf of the poor in debtor countries, openly challenging the IMF and G7 countries bent on consigning (the debt relief plan). . . to a slow death. Oxfam sees the initiative as a litmus test of Wolfensohns commitment to poverty reduction. He may have to confront his board with the simple message back me or sack me on poor country debt, said Justin Forsyth, representative of Oxfam.
Oxfam argues that governments willing to convert savings from debt repayments into social investment should be rewarded with an accelerated time frame for debt relief. Eligibility would be through a modified economic reform conditionality, along with a commitment to transfer between 80 and 100 per cent of any savings from debt relief into a ring-fenced budget account for social investments.