Note: This letter to the editor responds to an SJC opinion editorial published in the Gazette July 15 (the reference in the letter to July 24 is an error).

For the text of that article, click here.

The Gazette, Montreal, Saturday 28 July 2001

Poor countries don't want more debt relief

Letter to the Editor
Derek MacCuish (Comment, July 24, "World Bank should stop acting like a loan shark") praises the governments of Canada and other industrial countries that have pledged to cancel 100 per cent of debts owed to them by poor countries. Praise where praise is due. At the same time, however, he attacks the international financial institutions for not matching this commitment in order to protect their "stockholders." But just who are these stockholders? The government of Canada (3 per cent), the governments of other industrial countries canceling poor countries' debts and the governments of the poor countries themselves.

In fact, those same governments, having supported the Initiative for the Heavily Indebted Poor Countries (HIPC) that is helping to reduce debt by about two–thirds for 32 of the world's poorest countries (including about half of the debt owed to the IMF and World Bank), have shown little interest in further multilateral debt relief. Why?

The HIPC Initiative is removing debt as an obstacle to poverty reduction. Beyond HIPC, the consensus is that available aid money should be put to the best possible use in new poverty–reducing programs – including in those poor countries that never got into trouble with debt – rather than giving a free ride to those who borrowed too much in the past.

Mr. MacCuish fails to explain why poor countries – including those with democratic governments and a commitment to pro–poor policies and not the stereotypical corrupt dictatorships – continue to support and to draw upon the IMF's Poverty Reduction and Growth Facility, which he would shut down. It is because the support of the IMF does provide countries with a brighter future.

Those who demonize the IMF and the World Bank by caricaturing policies endorsed by governments sympathetic to the plight of the world's poor cannot say the same.

Mr. MacCuish is right on one point, however: the IMF has written more extensive explanations of why full debt cancellation is unwise. They are available at www.imf.org.

Thomas C. Dawson
Director
External Relations Department
International Monetary Fund
Washington, D.C.