15 March. Public Finance Sustainability in Subnational Governments
The HIPC CBP produced its penultimate publication, designed to assist developing countries to analyse the sustainability of public finances and borrowing by decentralised government entities such as provinces, regions and municipalities. It has been written by CEMLA based on a major pilot programme in Bolivia, and presents the key analytical issues and framework, a system for assessing capacity-building needs, and the results of the Bolivia pilot programme. Work on this methodology is to continue under the next post-CBP phase of CEMLA’s public debt management programme. To access the publication, click here(719.76 KB).
20 February. Dealing with Boom and Bust: Private Capital Flows to LICs
The FPC CBP released its final publication, analysing the impact of the global financial crisis on private capital flows to LICs. It is based on the analytical work conducted by the country teams in the FPC CBP participating countries, and contains many recommendations on how to maximise the contribution private flows make to development in LICs by reforming the global financial architecture, increasing and stabilising flows, changing their composition, accelerating diversification of sources and destinations, promoting dynamic sectors, responding to investor perceptions, and enhancing LIC monitoring, analysis and policymaking capacity. To access the publication, please click here.
The final HIPC CBP and FPC CBP newsletter, Strategies for Financing Development issue 40, celebrates the decentralisation of the two programmes to future management by regional organisations with technical support from DRI/DFI. It contains articles looking back at the achievements of the programmes and the future plans of each region, as well as the final communiqué from the HIPC Finance Ministers in Istanbul, the final activities by each programme in the second half of 2009, and information on the latest LIC debt sustainability assessments and the Gambia and Ghana’s recent private capital flows surveys. To access a copy of the newsletter please click here. The newsletter will be replaced by an e-newsletter with the same name starting in Q2 2010.
10 February. Haiti Earthquake Brings Debt Cancellation
In 2009 CEMLA and DRI began a programme of intensive assistance to improve Haiti’s debt strategy, analysis and management, funded by CIDA. Following Haiti’s devastating earthquake the international community has been calling for creditors to cancel the country’s outstanding debt. One of the first countries to do so has been Venezuela which announced it will cancel Haiti’s debt of about US$290 million. In July 2009 Haiti received US$1.2 billion in debt relief from its major IFIs and Paris Club creditors having reached its HIPC completion point. However this relief only covered debts incurred before end-2004. Since then Haiti has accumulated new debts and at the time of the earthquake Haiti owed US$890 million, of which about US$281 million is owed to the IMF including a new disbursement of US$114 million following the earthquake.
28 January. Republic of Congo Reaches Completion Point
Congo is the 28th country to receive HIPC and MDRI debt relief, totalling US$1.9 billion. For more details, click here. Pole-Dette is continuing to provide assistance to Congo to improve its debt management, through the HIPC CBP, most recently through an institutional mission from 8 to 12 June 2009.
19 January. Impact of the Financial Crisis on LIC Budgets
DFI has contributed a background paper for the 2010 UNESCO Education for All Global Monitoring Report, which is published today, analysing the impact of the global financial crisis on African government budgets and education spending. The paper concludes that many countries have been given more “fiscal space” to spend more to counter the effects of the crisis, which has meant that only a few have cut education spending, but that much more could be spent and financed with grants or loans, without jeopardising macroeconomic stability or debt sustainability, or creating excessive aid dependency. To access the background paper, click here, and for the overall UNESCO report, click here. The work will continue and broaden to cover all IDA-only countries and health spending, with funding from Oxfam.
The HIPC CBP distance learning programme ended in December, after three highly successful intakes of students, which have allowed HIPC country officials to develop a much more in-depth capacity on debt strategy analysis, including external debt restructuring, domestic debt market development, and external financing options including evaluating donor aid quality. At the request of regional partners and their member states, the HIPC CBP has streamlined and updated the distance learning study modules using generic data and documents, and reduced the length of study modules to eight weeks. This streamlined distance learning programme will be available from regional organisations, and further developments are planned for post HIPC-CBP methodology.
A new book, Networks of Influence, published by Oxford University Press and edited by Leonardo Martinez-Diaz and Ngaire Woods, contains a chapter highly praising the HIPC Finance Ministers’ Network established by the HIPC CBP, for its influence on the design and implementation of successive debt relief initiatives. To quote Professor Gerald Helleiner, this “demand-driven, focused and flexibly structured network.. …successfully strengthened the voice of previously marginalised unheard actors on the global financial stage”. For more information on the book please click here, and for a copy please contact Matthew Martin at DFI. The network has been ended as of December 2009, but the DFI Group is continuing to promote the voice of low-income countries in global financial discussions at all opportunities.
8 December. Debt Relief and Better Aid Improve Service Delivery
A new book, published by the African Development Bank - Debt Relief Initiatives, Development Assistance and Service Delivery in Africa, and edited by Matthew Martin and Désiré Vencatachellum, traces the processes and methods by which debt relief and better aid have dramatically improved delivery of the MDGs (especially health and education) in low-income African countries since 2000. Analysing the picture for the whole continent, and case studies of Ghana, Malawi, Senegal and Uganda, it concludes that debt relief and other high quality aid such as budget support have made a marked difference to MDG progress. For more information on the book, please click here, and for a copy, please contact DFI.
As previewed last year, the IMF has introduced a new matrix for setting borrowing ceilings for low income country Fund programmes. The new matrix replaces conditions prohibiting contraction of debt with a grant element of less than 35%. Instead the borrowing ceiling will take account of a country’s debt vulnerability (measured by its DSF debt distress rating) and its macroeconomic and public financial management capacity (measured by CPIA and PEFA indices). Countries with high debt vulnerabilities and low capacity will face tighter concessionality requirements (minimum 35% grant element) than those with low debt vulnerabilities and high capacity (for the most more advanced LICs there will be no concessionality limit).
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