Addis Ababa — African stakeholders reach consensus on key areas for reforming the Highly Indebted Poor Countries (HIPC) Initiative. "Broader, deeper, faster debt relief will only be effective if funds released from debt servicing actually reach the poor."

This was the firm consensus of a high-level meeting of African governments, bilateral and multilateral creditors, United Nations agencies, and leading non-governmental organizations from industrial and developing countries gathering at the United Nations Economic Commission for Africa (ECA) in Addis Ababa.

The meeting, organized in cooperation with the World Bank and International Monetary Fund, took place from 29 to 30 July.

"This is the very first time that all stakeholders have been represented around one table. Here in Addis Ababa we have a unique opportunity to really help the poor, not just by agreeing on more effective use of debt relief, but by beginning an ongoing dialogue which can lead to the common development of economic and social policies to lift millions out of poverty," said ECA Executive Secretary K.Y. Amoako.

The two-day meeting was part of a comprehensive review of the Heavily Indebted Poor Countries (HIPC) Initiative, an international debt relief programme administered by the International Monetary Fund (IMF) and World Bank. The Initiative, established in 1996, is designed to significantly reduce the external debt of some 40 of the world's poorest, most heavily indebted countries. So far four countries have completed the HIPC process (including Uganda and Mozambique), receiving about $5.5 billion in debt service relief, and six more countries have received preliminary commitment of debt relief totalling another $3.4 billion.

While the Initiative has marked a significant step forward, civil society around the world has called for the programme to be strengthened. Toward that end, the boards of the Bank and IMF in September called for a comprehensive review of the programme, with full participation of all stakeholders. In June, the G-7 proposed a major expansion of the programme, which would both increase and speed up the amount of debt relief delivered to poor countries. This week's meeting in Addis, which set out specific ideas on linking debt relief to poverty reduction, is a direct result if this global discussion.

Representatives reached broad consensus on the following points:

· Debt relief must be firmly linked to a broader approach to long- term poverty reduction and economic growth. Strategically targeted debt relief must be an integral component of a country's poverty reduction policy strategy, not an end in itself.

· Establishing an effective, transparent linkage will be a complex and long term challenge, requiring development and implementation of a wide range of social, economic, financial and political reforms. Specific areas include improved budget management; development of a medium term expenditure framework; poverty-focused public spending priorities, with a clear view toward achieving the 2015 international poverty targets.

· To be successful, such reforms must be pursued with the broadest participation of civil society, including NGOs, community groups, the media and the private sector. Emphasis should be placed on improving parliamentary processes, strengthening the role of the media and local groups in monitoring implementation and the outcomes of policies, and drawing clear lines of accountability.

· Creditors, particularly the international financial institutions, must avoid excessive conditionality. Performance criteria should reflect a balance between sound macroeconomic policies and structural reform joined with social and institutional strengthening, working together to reduce poverty. Donors should seek to coordinate their assistance in the context of poverty reduction action plans.

· Governments and International Organizations can learn much from the success and failure of other country experiences. Many countries have developed programmes designed to channel debt relief directly into poverty reduction programmes integrated within the budget, often in the education and health sectors. Many representatives suggested that the success of these programmes could be complemented by programmes that direct funds to employment-generating initiatives such as micro-credit programmes and private sector development.

· Participants welcomed the frank and informative dialogue, and hoped it could be continued.

Discussions will continue throughout the summer, leading to September's Annual Meetings of the World Bank and IMF, with a view toward reaching an agreement on an expanded framework. It is expected that by this time ministers will endorse an enhanced HIPC framework that could provide significantly more debt relief at an earlier stage. Moreover, specific attention will be given to placing debt relief within a context of overall poverty reduction and economic and social development.

For further information please contact Peter da Costa, Cabinet Office of the Executive Secretary, UN ECA, Addis Ababa, Ethiopia Tel: +251-1-51-58-26 (direct) or 251-1-51-72-00 (main switchboard), Ext. 354866 Fax: +251-1-51-22-33 E-Mail: ecainfo@un.org