Support for debt initiative: Camdessus backs Cologne summit declaration on relief for poorest countries

• Pages: 209-210

Page 209

In a news brief issued on June 22, IMF Managing Director Michel Camdessus expressed his support for the debt relief initiative proposed at the Cologne summit. The text of News Brief 99/33, which follows, is also available on the IMF's website (www.imf.org).

"I welcome the strengthening of the Heavily Indebted Poor Countries (HIPC) Initiative proposed last weekend in Cologne," Camdessus said. "We will do our utmost to secure agreement on the strengthened initiative and its financing by the annual IMF-World Bank meetings in September. The enhanced initiative should enable HIPCs that themselves pursue policies intended to foster sustainable development and poverty reduction to make an exit from unsustainable debt burdens. An enhanced initiative framework should provide a strong incentive for the adoption of such policies. It is particularly important that adequate financing be provided Page 210 for all multilateral institutions to enable them to provide debt relief on their claims as required under the initiative," he added.

As an indication of the strengthening of the initiative, the IMF estimates that the overall costs in net present value terms will more than double to $27.5 billion from the current level of about $12.5 billion. The bilateral forgiveness of official aid would be in addition to this.

The IMF is ready to play its part in financing its share of the costs of an enhanced initiative through gold sales. "IMF management, which initially proposed gold sales in September 1996, is committed to conducting such sales, once agreed, in an orderly and careful manner that would not disrupt the gold market," Camdessus said. "As agreed under the HIPC framework, gold sales would need to be supplemented by further bilateral contributions to meet the IMF's share of costs under an enhanced initiative. Consultations will be conducted during the summer in order to secure the full financing needed."

Camdessus underlined that an enhanced HIPC Initiative, to be...