Debt Management for Development

Debt Management for Development

Protection of the Poor and the Millennium Development Goals

Kunibert Raffer

This book exposes intolerable global double standards in the treatment of debtors and argues that fairness, economic efficiency and principles common to all civilized legal systems, must and can be applied to so-called ‘developing countries’, or Southern sovereign debtors.

Chapter 4: Gleneagles, the Multilateral Debt Relief Initiative and the US Crisis

Kunibert Raffer

Subjects: development studies, development economics, economics and finance, development economics


After more than three decades of ‘debt management’ (the IMF implemented its first ‘adjustment measures’ after 1973), first insufficient debt reductions for poor countries shortly later (disguised under the name retroactive terms adjustment), and then after two HIPCs plus one topping up, the G8 finally admitted that debt reductions so far had been insufficient. Thus the MDRI might well be called HIPC IV if one counted properly. Unfortunately, it might once again not provide the exit from debt problems. A EURODAD report (Hurley, 2007, p. 18) had already expressed concerns about how ‘to avoid an “MDRI II” ten years down the line’. The effects of the present US crisis are likely to render another initiative (HIPC V) necessary. Countries ‘eligible’ for MDRI support are ‘HIPC countries that have reached completion point’ as the IBRD (2007, p. 2) pocket brochure formulates. As with HIPC, 40 countries qualify. On the publication’s cover the MDRI’s goal is defined as: ‘To provide additional support to HIPCs to reach the MDGs.’ Permanent exit or external viability are not mentioned. They seem no longer intended. The serious debt problem already recognized by the Pearson Commission in the 1960s drags on. The solutions offered still lag behind this commission’s generous proposals made nearly 40 years before the MDRI was launched in 2006. Logically the additional support, which is now the goal of the MDRI, is only necessary because the initially announced goal of HIPC was not met: enabling SCs ‘to meet its current and future external debt-service...

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