Kyrgyz Protesters Target World Bank Debt Scheme

30 January 2007

In 1996 the IMF and the World Bank launched an initiative aimed at reducing the debt burden for some 41 heavily indebted poor countries (HIPC), whose total debts amount to about 10% of the Third World Debt. The list includes 33 countries in Sub-Saharan Africa.

The idea at the back of the initiative is as follows: a country on the HIPC list can start an SAP programme of twice three years. At the end of the first stage (first three years) IMF experts assess the ’sustainability’ of the country’s debt (from medium term projections of the country’s balance of payments and of the net present value (NPV) of debt to exports ratio.
If the country’s debt is considered “unsustainable”, it is eligible for a second stage of reforms at the end of which its debt is made ’sustainable’ (that it it is given the financial means necessary to pay back the amounts due). Three years after the beginning of the initiative, only four countries had been deemed eligible for a very slight debt relief (Uganda, Bolivia, Burkina Faso, and Mozambique). Confronted with such poor results and with the Jubilee 2000 campaign (which brought in a petition with over 17 million signatures to the G7 meeting in Cologne in June 1999), the G7 (group of 7 most industrialised countries) and international financial institutions launched an enhanced initiative: “sustainability” criteria have been revised (for instance the value of the debt must only amount to 150% of export revenues instead of 200-250% as was the case before), the second stage in the reforms is not fixed any more: an assiduous pupil can anticipate and be granted debt relief earlier, and thirdly some interim relief can be granted after the first three years of reform.

Simultaneously the IMF and the World Bank change their vocabulary : their loans, which so far had been called, “enhanced structural adjustment facilities” (ESAF), are now called “Growth and Poverty Reduction Facilities” (GPRF) while “Structural Adjustment Policies” are now called “Poverty Reduction Strategy Paper”. This paper is drafted by the country requesting assistance with the help of the IMF and the World Bank and the participation of representatives from the civil society.
This enhanced initiative has been largely publicised: the international media announced a 90%, even a 100% cancellation after the Euro-African summit in Cairo (April 2000). Yet on closer examination the HIPC initiative turns out to be yet another delusive manoeuvre which suggests but in no way implements a cancellation of the debt.

List of the 42 Heavily Indebted Poor Countries: Angola, Benin, Bolivia, Burkina Faso, Burundi, Cameroon, Central African Republic, Chad, Comoro Islands, Congo, Ivory Coast, Democratic Republic of Congo, Ethiopia, Gambia, Ghana, Guinea, Guinea-Bissau, Guyana, Honduras, Kenya, Laos, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nicaragua, Niger, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, Somalia, Sudan, Tanzania, Togo, Uganda, Vietnam, Zambia.

Representatives of some youth and human rights groups protested in front of
the parliament building in Bishkek, capital city, on 23 January 2007
against joining to the HIPC initiative. They promised they would offer their own plan of debt relief without HIPC.

Minister of Economy and Finances Akylbek Japarov
angrily responded on 26 January during a round table discussion that some
NGOs were “financed by foreign funds to do their campaign”, this caused
storms of laughter as the audience reminded him that since September 2005
(when Japarov had been appointed) his ministry received about $ 250 million
of foreign aid - both loans and grants, which only aggravated the debt

It became known on 26 January 2007 that an outgoing prime minister Felix
Kulov revoked his signature under the official letter (sent on 28 December
2006) to the International Monetary Fund IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.
and the World Bank World Bank
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

, in which Kulov
had taken personal responsibility for participation in HIPC.

Kulov said that in a new situation he did not want his name to be associated
with HIPC initiative. This is going to create difficulties for a new cabinet
because growing opposition to HIPC is spreading while ministers will have to
begin a new round of persuasions.

HIPC continues to spark significant irritation in various layers of Kyrgyz society. There were two popular movements in December 2006 that included “anti-HIPC” pattern in their names. In January 2007 yet another anti-HIPC group announced the launch of a new movement called “For the Salvation of Kyrgyzstan”. They are more radically inclined.

All anti-HIPC movements coordinate their activities and have declared they are thinking about various options should the Kyrgyz government choose to continue proposing HIPC as the only economic strategy. These include court challenges, a return to mass public protests, acts of civil disobedience,etc.
Asked about a planned meeting in Brussels on 13 February of a Kyrgyz-European Cooperation Council to discuss, among other issues, a possibility for Kyrgyzstan to join HIPC, Aziza Abdrasulova, a leader of anti-HIPC coalition, said that the current unpopular government could not negotiate such serious issues without the risks of igniting massive unrest in the country. She likened acting premier Felix Kulov to a passenger in a train that can depart at any moment leaving the country in havoc. Aziza also said that if Felix Kulov was seeking fame for his loyalty to HIPC, he could only obtain a stigma of Augusto Pinochet in the eyes of many Kyrgyz citizens.

action against HIPC in front of the office of the World Bank in Bishkek, Kyrgyz Republic.

BISHKEK, November 29, 2006 (RFE/RL) — Representatives of several Kyrgyz youth groups organized a gathering today outside the World Bank’s offices in Bishkek to protest tentative government plans to join the Heavily Indebted Poor Countries (HIPC) program, RFE/RL’s Kyrgyz Service reports.

The several dozen protesters who turned out chanted slogans decrying international financial institutions.

Critics say HIPC requires countries to spend more money on servicing their debts, instead of developing poverty-reduction programs. Twenty-nine countries, most of them African, have joined the HIPC program.

Addressing a news briefing in Bishkek on November 28, Alisher Mamasaliev of the nongovernmental group Civic Platform said that most of his countrymen would like to know more about the conditions attached to the debt-relief assistance program, which is co-sponsored by the International Monetary Fund (IMF).

“The majority of the country’s population still does not understand [membership of the HIPC],” Mamasaliev says. “President [Kurmanbek] Bakiev himself once said that he does not understand the conditions [of this program]. How can we, not knowing the conditions, conduct entry talks?”

Members of the Kyrgyz parliament’s budget committee on November 22 expressed opposition to Kyrgyzstan’s participation in the HIPC scheme.
action against HIPC in front of the office of the World Bank in Bishkek, Kyrgyz Republic.


In December 2006 the IMF and the World Bank plan to do further wrenching
of Kyrgyz government’s hands so that they accept HIPC (Heavily Indebted Poor
Countries Initiative). Many civil society leaders are for debt relief but
absolutely not for achieving it through HIPC. There are deep divisions among
Kyrgyz ministers with regard to HIPC. Also we are receiving hopeful signals
from the presidential office requesting for more discouraging facts from
various countries where HIPC was implemented. Fortunately, some of our
newspapers started the anti-HIPC publications describing African countries’
failures.The public is meanwhile boiling with anger.

And in the course of the parliamentary hearing on our country’s human rights obligations (held in mid-September 2006) NGOs familiarized the public with a term “illegitimate debt” (projects approved by lenders with huge disrespect to their own safeguard policies had been used to aggravate situation in the area of economic and social rights instead of improving it), so now it is a part of political vocabulary despite visibly drawn faces of some officials from the Ministry of Finance. It is in the text of recommendations that the government will have to work on.

On 12 October 2006 there was a big public event, Second National Civic Forum (organized in BIshkek by a number of NGOs together with some political parties), the entire Cabinet of Ministers was present. Everybody applauded when a village activist suggested that rejection of HIPC and energy privatization should be included into the Forum’s resolution. In July 2006 more than 25 civil society organizations of Kyrgyz Republic handed their letter to the G8 G8 Group composed of the most powerful countries of the planet: Canada, France, Germany, Italy, Japan, the UK and the USA, with Russia a full member since June 2002. Their heads of state meet annually, usually in June or July. summit protesting debt relief through HIPC.
action against HIPC in front of the office of the World Bank in Bishkek, Kyrgyz Republic.

Bureau on Human Rights and Rule of Law
17 October 2006



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