Debt relief (international law)

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Under debt (also: International debt ) is defined as the partial or total waiver of the repayment of a monetary amount, which in particular from a national economy (government) is owed another economy. The term also includes slowing down or stopping the increase in debt. In particular, debt relief (in the sense of international law) refers to the debt relief of developing countries , which began to explode in the 1980s with the Latin American crisis (Mexico 1982 etc.).

In the 1990s, the debt relief of the heavily indebted developing countries was the focus of many campaigns by NGOs , Christian organizations and others active in development policy , all of which operated under the Jubilee 2000 banner . These campaigns, e.g. For example, as expressed in public demonstrations at the G8 Summit in Birmingham , they were successful in that they helped put the issue of international debt relief on the agenda of Western governments and international organizations such as the International Monetary Fund and the World Bank . Finally, for the developing countries Heavily Indebted (HIPC), the so-called. HIPC initiative developed which enabled a systematic framework in line to certain criteria and restrictions debt of the poorest countries in the world, and thus the attempt was made to international funds more on poverty reduction to focus.

The HIPC program is subject to certain conditionalities, which are similar to those of IMF or World Bank loans. Ie., There are particular structural reforms required in the countries to entschuldenden, some with the condition for the privatization of public utilities (including water and electricity industry). In order to qualify for irrevocable debt relief one, countries are required to present a macroeconomic stability over time and adequate poverty reduction strategy ( Poverty Reduction Strategy ) have implemented for at least one year. As part of the HIPC target to fight inflation , some countries have been urged to invest more in the health and education sectors.

Multilateral debt relief initiative

The Multilateral Debt Relief Initiative (MDRI) builds on and continues the HIPC initiative. It was decided in June 2005 by the finance ministers of the G8 countries at the 31st summit in Gleneagles, Scotland. Countries that have reached the so-called completion point as part of the HIPC initiative receive full debt relief from the International Monetary Fund, the World Bank subsidiary IDA ( International Development Association ) and the African Development Fund (AfDF). However, the MDRI does not include other regional development banks and multilateral creditors. The multilateral debt relief initiative is intended to provide an additional incentive for heavily indebted poor countries to continue their reforms. In order to ensure that all low-income countries (LICs) are treated equally, the agreed additional multilateral debt relief will be credited to the beneficiary countries when new aid is awarded by the IDA and the African Development Fund. The G8 countries have committed themselves to replacing the returns from the IDA and AfDF due to the debt relief with additional donor contributions. These compensation payments are then redistributed among the recipient countries of the IDA and the AfDF in a performance-based manner (so-called performance-based allocation ).

Success of the MDRI

By the end of 2013, 35 countries had met all the requirements for complete debt relief. The individual states benefit to very different degrees from the initiative. While some states like Haiti and Mali have been set back by natural disasters and civil unrest, others have seen extremely positive development since then. For example, Bolivia has had very stable economic development since 2006, has high foreign reserves and is making great strides in combating poverty. Another clearly positive participating country is Ghana . Overall, however, most states can only meet the ambitious development goals of the initiative ( Millennium Development Goals ) to a limited extent, according to the IMF.

criticism

Opponents of international debt relief argue that it will ultimately result in a blank check being issued to other governments, and concerns have been expressed that the savings generated by debt relief will not ultimately benefit the poor. Others argue that many developing countries will now take on new debts on the international capital markets because they can assume that the debts will be canceled again - as part of a bailout . The risk resulting from this disincentive is called moral risk . Ultimately, this would at best benefit the rich population groups in these debtor countries, who in turn only invest their money abroad. Therefore, many critics claim that instead of canceling the debt, it is better to invest the money in specific aid projects, which then actually benefit the poor sections of the population. In addition, debt relief is unfair to developing countries that have their debt sustainability under control and are able to pay on time. This would even dissuade such governments from sound debt management in the future and ultimately drive these countries into a debt spiral as well.

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