Proposed by the World Bank and the IMF in 1996, and extended by a meeting of finance ministers of the G7 meeting in Cologne in 1999. It proposed debt relief for the 42 poorest countries which had ‘unsustainable debts’ if they met a number of criteria, which included stable government structures and stable budgets in which the gains from debt relief would be invested in education and social spending. Although welcomed by many non‐governmental organizations, it was criticized as not being the breakthrough claimed by politicians. The classical criteria for economic stability were criticized, as they had not worked in the past. The G7 criteria for the ‘sustainability’ of debt (according to ability to pay, not the need to develop) have also been criticized. Finally, the mechanisms by which countries were to qualify were accused of being heavy‐handed and slow. Nevertheless, by 2007, 29 countries had successfully qualified for full debt relief under the HIPC initiative. According to data provided by the World Bank, total debt relief for these countries amounted to some $62 billion. In these countries, an average of 2 per cent of GDP was diverted from debt relief to fighting poverty. Nevertheless, the countries were not relieved of all of their debt, and many states continued to struggle with servicing their debt burdens.www.worldbank.org/hipcData from the World Bank on the state of the HIPC.http://www.jubileeresearch.orgData from a think tank monitoring the progress of the HIPC.
Subjects: Contemporary History (Post 1945).