Pressure pays off at World Bank - but further to go

Sustained pressure from campaigners has helped win $37 billion of cancellation of poor countries' debts to the World Bank, and prevent unacceptable delays in delivering the cancellation.

The cancellation is part of the overall package promised by the G8 at their 2005 summit in Gleneagles, Scotland, which is known as the Multilateral Debt Relief Initiative. The World Bank part is providing by far the bulk of the cancellation, and could eventually total up to $37 billion.

Over the last month, Jubilee campaigners in the UK and worldwide have been sending emails to protest that the Bank's plan for cancellation would have forced poor countries to wait up to 15 months after qualifying for the debt cancellation before actually getting it - and meanwhile continuing to make debt payments. At the last minute, the World Bank's Executive Board overturned this plan: now the longest any country will have to wait is 3 months. Thank you to those who kept the pressure up! This follows a similar success in persuading the IMF not to exclude countries from debt cancellation.

The deal means that 17 countries (those which have completed the Heavily Indebted Poor Countries (HIPC) initiative, with the exception of Mauritania) will get cancellation of World Bank debts from July 2006. Other countries - up to around 40 in total - may qualify in future as they complete HIPC. The total eventual cancellation could be as much as $37 billion, saving poor countries around $1 billion a year in debt service.

This cancellation signals a very important recognition that some countries can and should get full cancellation of debts to the World Bank. However, countries must still comply with all the unfair and harmful conditions in HIPC in order to qualify. The World Bank is also being less generous than the IMF, by only including debts incurred up to the end of 2003 instead of 2004 - this saves the World Bank's funders around $5 billion, by limiting the cancellation given to some of the world's poorest countries.

Despite its limitations - and campaigners' calls to go further - this is by far the biggest debt cancellation deal agreed since the HIPC initiative was extended in 1999. It will make a real difference to poor people in the countries that are benefiting. Zambia's new budget, for instance, includes an increase in health and education spending, which will pay to recruit 4,500 teachers, build and repair schools, fund an HIV/AIDS programme and pay for more healthcare staff and medicines. This latest announcement also shows how important it is to maintain public pressure after the big declarations at G8 summits or other high-profile meetings - to ensure that debt cancellation is not just announced but delivered properly. Thank you for all your hard work!

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Follow the links for full details of the Multilateral Debt Relief Initiative and Heavily Indebted Poor Countries initiative.