Implementation was supposed to begin shortly thereafter. First, the process of qualifying debtor nations has taken longer than expected. Second, the debt-relief initiative itself has sparked a heated international debate. The world's most powerful nations disagree on what conditions, if any, should be attached to debt-relief programs. Moreover, the problem of moral hazard has not been resolved, and concerns remain that corruption will defeat the purpose of the initiative.
Financing also is an issue.
Although G-7 members have agreed to cancel under various terms and conditions all bilateral debts, writing off multilateral loans will require additional resources. The HIPC Trust Fund, created as a key part of the initiative to finance debt relief from such regional multilateral banks as the Inter-American Development Bank, lacks adequate funding. Another problem is that roughly one-third of the HIPCs are engaged in conflict of some sort, and donors want assurances that recipients of debt forgiveness will not divert money from loan repayments to spending on arms. Speaking after the finance ministers' meeting, Mr. Summers blamed HIPCs for not meeting program conditions. However, he also criticized Congress for its failure to release funds that Washington had promised.