The IMF has announced that low income countries will not have to pay interest on outstanding concessional loans through to the end-2011. This is part of the package of measures to assist LICs weather the current economic crisis, which includes:
boosting IMF concessional lending to up to $17 billion through to 2014 (of which up to $8 billion over the next two years) to be funded in part through gold sales
review of interest rates annually to ensure Fund support remains concessional
27 July - DFI/ODI Jointly Organise Consultation of LICs on Future of BWIs
DFI and the Overseas Development Institute have recently been asked by the UK Department for International Development to facilitate a consultation of Low-Income Countries on making the Bretton Woods Institutions more flexible and responsive to their needs. This will take the form of an online consultation lasting from 27 July to 13 August, focussing on civil society organisations, and two meetings with LIC Ministers and officials (in Sierra Leone on 14 August and London on 17 August). For more details of the content of the consultation, see blogs.odi.org.uk
21 July – UK Government consultations on ’ vulture fund’ legislation
The British Government is thinking about new legislation to limit the proportion of HIPC debts that a creditor can claim under UK law. The idea is to prevent ‘vulture funds’ benefitting from suing HIPcs in the UK courts. The consultations are open to interested parties including HIPCs, with a deadline of 9th October for submissions. For more information see www.hm-treasury.gov.uk
16 July - Sierra Leone Sensitisation Seminar and Updated Strategy
WAIFEM and DRI organised a workshop to update the Sierra Leone National Debt and New Financing Strategy using the LIC-DSF templates, in Freetown from 6 to 16 July, in which national staff were 60% of the resource people. It culminated in a sensitisation seminar chaired by the Financial Secretary and attended by the Minister and Deputy Minister of Finance. WAIFEM spoke about the importance of debt sustainability for Sierra Leone’s development, and DRI made a presentation about prospects for diversifying sources to finance Sierra Leone’s development.
15 and 27 July - DFI Study for Oxfam on IMF Policy Support Instrument
DFI recently completed a study on the IMF’s Policy Support Instrument for Oxfam GB. Based on the views of African policymakers, it finds that there is a need for major reform of the PSI, especially in terms of reducing conditionality, to make it much more clearly distinctive from other IMF instruments. The draft study was the subject of a joint seminar with the IMF at the BWI Spring Meetings, and the final study was submitted to the IMF Board and management just before the recent IMF Board discussion of the PSI. The study is available in English here (http://www.oxfam.org/en/policy/what-point-psi-views-african-policymakers) (and is available in French by request from DFI) and the summary of the IMF Board discussion here (www.imf.org/external/np)
On 1 July, Haiti reached its HIPC completion point, receiving US$1.2 billion of debt relief. For more details, click here. CEMLA and DRI have recently begun a programme of intensive assistance to improve Haiti’s debt strategy, analysis and management, funded by CIDA, which will be discussed in our forthcoming newsletter.
On 30 June, the Central African Republic also reached completion point, receiving US$578 million in debt relief. For more details, click here. DRI and Pole-Dette are continuing to provide assistance to CAR to improve its debt management, through the HIPC CBP, most recently through a regional workshop to train its National Debt Strategy Committee.
Cologne Meeting Discusses Next Steps on Debt Relief
DRI participated in a meeting on June 18-19 to discuss “Debt Relief and International Debt Management in the Context of the Present Financial Crisis” in Cologne, ten years after the G8 Summit agreement on the Enhanced HIPC Initiative. While acknowledging the progress of the last fifteen years, we strongly advocated additional measures to reduce transaction costs, design a debt relief system fit for combating the financial crisis, and make the power balance in debt relief fairer, and for basing debt relief on financing needs to attain the MDGs and combat climate change. For the presentation given, click here(86.50 KB).
26 June – Medium-Term Debt Strategy (MTDS) Analytical Tool and User Guide
On 26 June, the IMF released its new analytical tool and user guide for preparing a medium-term debt strategy. Click here to download the Excel-based analytical tool and here to download the user guide.
The HIPC CBP partners will be working with the IMF and World Bank in future to begin training countries in the use of the tool. To begin this process, DRI and HIPC CBP partners participated in the first Training of Trainers event on the MTDS in Vienna on 18-22 May.
20 May – UKAN/ODI Aid Effectiveness Meeting
DFI participated in a panel at the UK Overseas Development Institute to assess how serious donors are about aid effectiveness, and analyse the challenges to 2010 and beyond. For more details, click here
Commonwealth/OIF Debt Sustainability Meeting April 22-23 2009
The papers prepared by Development Finance International for the Commonwealth and OIF Low-Income Countries’ Debt Sustainability meetings, which were held just before the BWI Spring Meetings, are now available on the Commonwealth Secretariat website. They include:
Diversifying Sources of Financing for Development. This paper examines North-South concessional flows, South-South flows, and multilateral, bilateral and commercial sources of non-concessional finance to assess scope for low-income countries to mobilise more external finance for their development. It makes many recommendations, including changes to the LIC-DSF and IMF/IDA/AfDB policies, to facilitate diversification.
Fiscal Sustainability of Debt. This paper examines how to improve the fiscal sustainability of central government external and domestic debt, guarantees and contingent liabilities, and sub-national debt. It recommends ratios and other methods to be used for analysis, as well as policy measures to take to improve fiscal sustainability.
Debt Relief to Combat Climate Change. This paper shows many low-income countries have both debt sustainability problems and financing needs to combat climate change, concludes that debt relief would be an ideal means to provide predictable financing, and recommends further work on a proposal for debt relief to combat climate change.