Debt relief is designed to help poorest countries implement poverty reduction strategies

• Pages: 385-388

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Jack Boorman has been Director of the IMF’s Policy Development and Review (PDR) Department since August 1990. PDR plays a central role in the design, implementation, and evaluation of IMF policies relating to surveillance and the use of IMF financing, including concessional financing for low-income countries. Boorman met recently with the IMF Survey to discuss the important progress being made in the area of debt relief for heavily indebted developing countries.

Jack Boorman, a U.S. national, holds a Ph.D. in economics from the University of Southern California (USC). He taught economics at USC and the University of Maryland and served with the U.S. Federal Deposit Insurance Corporation before joining the IMF staff in 1975. He served as a division chief in the European and Asian Departments of the IMF and as Assistant Director of the European Department before becoming Deputy Director of the then Exchange and Trade Relations Department (now Policy Development and Review Department) in 1987. He also served, from 1976–78, as the IMF's Resident Representative in Indonesia.

IMF SURVEY: The Annual Meetings in Prague set a goal of bringing 20 countries to their decision points under the enhanced Heavily Indebted Poor Countries [HIPC] Initiative by the end of this year when they will begin to receive relief on their debt payments. How close are we to meeting that objective?

BOORMAN: By early December, the Executive Boards of the IMF and the World Bank had taken the necessary decisions to make assistance available to 13 eligible countries. Even now, most of them are receiving interim assistance.

Boorman: “This is a big change in the way these institutions have operated.”

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We have been working actively on 11 other countries over the last several months, and I am confident that we will reach the decision points for at least 6 and, more likely, 8 or 9 of them, so that we will be able to meet or be very close to the target of 20 countries by the end of December.

In every case, difficult questions have had to be answered, particularly with our focus on reaching this objective by the end of the year. The deadline has helped to coalesce support and has focused everyone’s attention on making sure that everything is running as smoothly and as rapidly as possible. At the same time, we feel, as do our shareholders, that the elements of the program have to be right and designed in a way to ensure that the objectives of poverty reduction in these countries can be met and that the debt relief provided is used to further those objectives.

IMF SURVEY: Once the goal of assisting 20 countries has been met, what will it mean in terms of actual debt relief for the poorest countries?

BOORMAN: The countries that we will bring to the decision point by the end of the year will receive varying degrees of debt relief. The initiative is tailored to the specific circumstances of each of the countries and is intended to put them in a situation where their debt service and debt profile will be sustainable from now on. That requires different degrees of relief for each country. When you take account of the assistance being provided through the Paris Club and bilateral, multilateral, and regional agencies, the debt of these countries will be reduced by about two-thirds on average. And, contrary to the statements of some critics, all of these countries will see a significant immediate reduction in their debt-service payments. In one country, Zambia, the reduction is not as large as in other cases, but here...