Washington, DC — The International Monetary Fund and the World Bank's International Development Association (IDA) approved US$3.1 billion under the Heavily Indebted Poor Countries (HIPC) Initiative, and another US$1.3 billion of debt relief under the Multilateral Debt Relief Initiative (MDRI).
"This is a step in the right direction. Poverty is so great in the Ivory Coast and the people need this relief," said Eric LeCompte, Executive Director of Jubilee USA Network. "However, even though this is a step in the right direction, this doesn't do enough to address where this debt came from and how to lift this nation out of poverty."
To qualify for these debt relief programs, nations must be both heavily impoverished and highly in debt. Côte d'Ivoire has struggled with poverty and civil war, while its economy struggled. Throughout the 1980s and 1990s, the nation's economy shrank by 30% while the government was spending about 1/3 of its revenue annually repaying foreign debts. At the same time, from 1985 to 1998, the percentage of the population living on less than a dollar a day increased from 25% of its population to 50%.
While this debt relief will ease the country's debt struggle, it should be seen as moderate debt relief and not a solution to years of struggle for Côte d'Ivoire. To reach the completion point of the initiative, the point at which the HIPC process ends and a country is eligible to receive debt relief, countries must comply with a number of conditional economic measures, including radical free market policies and severe austerity measures laid out by the IMF.
Additionally, under these initiatives, debts from loans taken out in the past eight years and those owed to most private creditors will remain, meaning that loan servicing could be higher and possibly rise back to one-fifth of government revenue by the end of the decade.
"We need real solutions to the international debt crisis that is affecting poor people around the globe. We really need to move beyond relief with conditions and establish an international debt arbitration process - a process that will be in the best interests of the lender and borrower," said LeCompte.
Jubilee USA Network is an alliance of more than 75 US organizations, 200 faith communities and 50 Jubilee global partners. Jubilee USA Network has won critical global financial reforms and more than 120 billion dollars in debt relief for the world's poorest countries.