WRITTEN QUESTION E-0936/00

by James Nicholson (PPE-DE) to the Council

(30 March 2000)

Subject: Jubilee 2000 Coalition

The Jubilee 2000 Coalition is campaigning for debt cancellation for the world's poorest countries. The Cologne Initiative of G7 countries provides for cancellation for around 33 countries but offers nothing to many other countries, identified by the Coalition as being in urgent need of assistance.

Does the Council support the objectives of the Jubilee 2000 Coalition? What action has the Council taken to reduce demands for debt repayment by the world's poorest countries?

Reply

(29 September 2000)

The EU and the Member States are fully aware of the difficulties many poor countries face because of their excessive debt, which affects their development prospects and undermines their political stability and progress towards democracy.

In order to alleviate the debt burden, the EU and the Member States have actively taken or participated in initiatives at various levels, in conformity with their competencies.

On 6 July 1998, the Council decided to participate fully in the HIPC (Highly Indebted Poor Countries) initiative launched by the IMF and the World Bank. This initiative was based on a commitment by the international financial community to reduce countries' debt burden to a sustainable level provided that the country completes a period of strong economic policy performance.

At the G7 Cologne summit in June 1999, Ministers agreed to an expanded HIPC initiative that will provide faster, deeper and broader debt relief.

The European Council of Cologne in 1999 highlighted the importance of finding a lasting solution to the debt problems of the poorest countries. The European Council welcomes the common European position

on improving the debt initiative for heavily indebted poor countries and supports a faster debt reduction process for the poorest countries and ambitious aims as regards the extent of debt remission. It emphasises the debt relief should be more closely linked with a strategy for poverty alleviation. The Member States are prepared to support an increase in the remission percentage on commercial loans to 90 % or more at the Paris Club and will seek to promote further reductions for debt from official development aid. Within this framework, with appropriate burden-sharing, Europe is ready to bear its fair share of the cost of an improved debt initiative.

At the annual World Bank/IMF meetings in Washington in September 1999, the donor community took an ambitious set of political decisions closely linking poverty alleviation strategies, structural adjustment programmes and the debt reduction initiative. Following these decisions the EU-ACP Joint Council decided in December 1999 that unallocated programmable resources from the EDF might be used in the form of grants for meeting the outstanding debt and debt servicing obligations to the Community of the first ACP countries which qualify under the HIPC initiative ( 320 million), and for contributing to the overall financing of the HIPC initiative by providing up to 680 million for the HIPC Trust Fund managed by the World Bank. A contribution of 54 million to the HIPC Trust Fund for the non-ACP HIPCs was also agreed on at the meeting of the General Affairs Council on 6 December 1999. This amount is in addition to the contribution of 1 billion from the EDF for all highly indebted poor countries, which was agreed on at the same meeting.

In the framework of the Africa-Europe Summit in Cairo on 3 and 4 April 2000, a number of Member States announced their willingness to write off most if not all debts of HIPC countries.

Additionally, at this Summit, parties:

- considered that the existing measures and mechanisms aiming at the alleviation of the African debt overhang shall be appropriately evaluated as far as their modalities and implementation are concerned taking into account their impact on all African needs, especially those of middle income countries with regard to their debt servicing capacity and eventually find equitable solutions.

- acknowledged that the success of any debt relief initiatives depends on the implementation of the necessary economic reform measures, and in this regard encouraged the African countries to continue to implement such reforms, to institute good governance and to commit themselves to ring-fencing savings from debt relief for poverty alleviation, including the improvement of the social sectors and the rehabilitation of infrastructures.

- noted the African position on the issue of external debt, which seeks debt relief and cancellation for all indebted African countries in order to create an enabling environment for sustainable development.

- agreed to support African countries in channelling the amounts of resources from debt relief to poverty eradication strategies and programmes, including in social and infrastructural sectors.

- reaffirmed the commitment to achieve the globally agreed target of poverty reduction by half by the year 2015.

To this end, the bi-regional group at Senior Officials' level will take the necessary measures to prepare a report on the external debt of African countries, which will be studied within a reasonable timeframe at Ministerial level in the framework of the follow-up mechanism.