WASHINGTON: Debt relief for poor countries will be a central issue both inside and outside this weekend’s International Monetary Fund (IMF) and World Bank autumn meetings.

Inside the heavily-guarded venue, finance ministers and central bankers from 184 countries will discuss financing and an initiative to bring debt relief to Heavily Indebted Poor Countries (HIPCs).

The twin financial institutions will urge donors to follow up on their pledges and make up an 800-million-dollar shortfall in funding for the HIPC Initiative that was launched six years ago.

On the streets outside the meetings, thousands of protesters will push for greater debt relief and argue that the current system is a failure that claims countless lives a day in the Third World.

“Simply put,” said Soren Ambrose of the Jubilee Network, “the current debt relief plan has largely failed to achieve its stated goal of providing an exit to the debt crisis of poor nations.”

In the 1990s, the Jubilee 2000 campaign — among it members Pope John Paul II, Irish rock star Bono and thousands of church-goers — pushed creditors to relieve poor countries’ crippling debt burdens.

Interest payments on reckless loans often granted to dictators, they argued, were sapping poor countries’ scarce resources - cutting into tight budgets for health, education and social services.

Zaire, for example, accumulated 12 billion dollars in sovereign debt while the late strongman Mobutu Sese Seko horded personal assets worth 4 billion dollars, said the Brookings Institution.

The IMF and bank creditors, including the “Paris Club”, reacted in 1996 by launching the HIPC Initiative, which was enhanced two years later and now includes 26 of the world’s poorest countries.

The programme promised relief to countries with debt burdens 150 per cent the size of their exports, provided they took steps to reduce poverty and pursue social and economic reforms.

Of 42 eligible countries, 26 have entered the programme and six have qualified for part of the 40 billion dollars in relief: Bolivia, Burkina Faso, Mauritania, Mozambique, Tanzania and Uganda.

As a result, overall debt service requirements in these countries have been cut by one third, said the bank last week. It estimated two thirds of the relief will finance better health and education. The Jubilee campaign agrees some progress has been made, but says the success stories only show how much more needs to be done.

In Mozambique debt relief meant 500,000 people were vaccinated against deadly diseases, and in Tanzania some 1.5 million children went to school this year after ‘user fees’ were scrapped.

Building on such successes, the Center for Global Development argued in a paper, debt relief must be raised and given to more nations — including Indonesia, Nigeria and Pakistan.The 50 Years is Enough Network argued it is also wrong “to demand that the people of South Africa service massive debts incurred by the apartheid regime ... or to insist that the people of the Philippines continue paying the interest on Imelda Marcos’s credit cards”.

Another flaw, critics charge, is that countries must agree to new IMF loan agreements before getting relief, continuing the debt spiral — a problem that does not just affect the poorest countries.

Worldwide, the IMF said this month that fiscal 2002 lending has almost tripled to nearly 50 billion dollars, as the fund has tried to ease the punishing effects of a global economic downturn.

This did not include the largest-ever IMF bailout of 30 billion dollars, granted to Brazil to avert a repeat of Argentina’s record default on much of its 142 billion dollars in debt.

The money went to Brazil despite a growing dislike in the United States and elsewhere for “mega-bailouts” - and over criticism that they merely protect rich investors and promote irresponsible lending.

To stop meltdowns before they happen, and make debt restructuring more orderly, the IMF will this weekend present a plan to effectively let countries file for bankruptcy and reschedule their debts. The IMF has a strong incentive to change the system: Opposition has grown in Latin America to repaying debts while tough austerity measures drive millions deeper into poverty.—dpa