By: Maddie Baker and Mary Donahue
It was announced last month that Côte d’Ivoire will receive over $4 billion in debt relief through the Heavily Indebted Poor Countries Initiative (HIPC) of the IMF and the Multilateral Debt Relief Initiative (MDRI) of the World Bank. A nation that struggled with civil war and widespread poverty during the last decades of the 20th Century, Côte d’Ivoire’s poor economic condition was compounded by crushing external debt as nearly 1/3 of its revenue was spent on servicing that debt annually. This high cost of debt was detrimental to the country’s citizens with the nation witnessing the percentage of people living under less than one dollar per day increase from 25% to 50% between 1985 and 1998.
Although this debt relief is a step in the right direction, it fails to be evidence of a systemic and long-term solution. In order to have reached the completion point of HIPC and receive full debt relief, Côte d’Ivoire had to meet IMF-implemented requirements that included harsh austerity measures and privatization, which can harm struggling economies more than help. Furthermore, because loans taken out in the past eight years and those owed to private creditors are not being cancelled, debt servicing could rise back to one-fifth of government revenue.
Read more in our press release.
Photo Credit: UN Youth Blog http://blog.unyouth.org.nz/tag/cote-divoire/