|
HIPC Initiative,
now how was that a bad policy?
E. Ablorh-Odjidja, Ghanadot
Some were furious at the temerity of the Kufuor administration
for accepting the designation Highly Indebted Poor Countries
(HIPC) for the country in 2001, and
wasted no time to declare that the worst would happen. They were
to wait in vain. But here comes the funny part. These very
people who would not accept a penny under the HIPC designation
are now wondering where all the windfall that resulted from the
initiative goes.
Was Ghana a poor country in 2001? The experts said so and with a
per capita of only $300.00 then, it would have taken a good
stretch of the imagination to argue otherwise.
So when the Directors of IMF declared that year that Ghana was
“eligible for assistance under the enhanced HIPC Initiative in
view of her “high level of indebtedness and external
vulnerability” it was time to accept the HIPC status, and the
Kufuor regime did.
The HIPC plan, according to the World Bank, was the “the first
international response to provide comprehensive debt relief to
the world's poorest, most heavily indebted countries. “
The HIPC plan was first introduced by the World Bank and the IMF
in 1996. In 1998, an improved version was launched. By July
2004, Ghana had completed the required steps and became the 14th
country to qualify; among 18 other countries, mostly African.
The immediate result, again according to World Bank, was to
provide a total debt relief amounting to “US$3.5 billion in
nominal terms” for Ghana from all her creditors.
The freed resources were then to be used to support poverty
reduction programs. But there has since been some
misunderstanding by some, intentional or not, as to how exactly
the relief is being applied.
Central to the discussion on fund usage is a question that is
yet to be asked of those who opposed the idea initially. Was the
HIPC Initiative a good move or not? Neither the question nor its
answer can be appreciated by those in opposition. But like it or
not, something positive has happened since the HIPC Initiative.
The Kufuor government, apparently was and is of the view that
“The application of HIPC funds to HIPC designated projects is
done in harmony with the allocation of resources to other growth
and poverty reduction programmes…” and that the “discussion of
HIPC funds as though it were the only stand-alone resource
intended for total achievement of the country’s poverty
reduction objectives is unhelpful.”
The truth of the matter is that since the HIPC designation,
Ghana has become a magnet for grants because the rich countries
have discovered that she is managing her affairs well. There was
the MCA grant from the Bush administration this year, totaling
some 547 million US dollars. Just this week Canada has added
hers; a sum of some 480 million Canadian dollars budgetary
support yearly.
As the monies poured in, you might think that the gestures from
this collective largesse would be met with applause. Instead,
the level of grousing has gone up noticeably in some quarters.
The people who were opposed to the HIPC Initiative are now
apparently the most concerned guardians of the windfall that has
resulted. They want to monitor now how the relief money is
spent.
But that is alright in a democracy, and fortunately, there are
some answers.
The Social Enterprise Development Foundation (SEND) based in
Accra, Ghana, had already reported in June 2004 that “The
Government (of Ghana) has used the Highly Indebted Poor
Countries (HIPC) funds extremely well.” They were quoting no
other person than Mr. James D. Wolfensohn, President of the
World Bank.
The visiting Canadian Governor General, Her Excellency Michaelle
Jean, has just pronounced President Kufuor as a good leader
whose leadership should be an important example for the rest of
Africa. She did this on November 28,
2006 while extending the check of some 480 million yearly
budgetary supports for Ghana.
In Her Excellency Michaelle Jean words to President Kufuor
“Canada has dramatically increased its development aid in
recognition of the success your country has had in strengthening
the principles of democracy and human rights.”
The background to all this has to be remembered: When Kufuor
took the HIPC initiative the opinion of the opposition was that
it was the worst policy decision ever. That the decision would
scar and haunt Ghana in the financial world since no reputable
investor would consider the country investment or loan worthy.
Well, the investments and the grants are coming in now. So
naturally, the focus for antagonism must shift from anger at
mere name designation to how the freed resources from the
erstwhile hated HIPC Initiative are being spent.
A Press release from the Ministry of Finance and Economic
Planning tried to explain how the HIPC Funds have been
disbursed. It read boldly that “the yearly savings from the
Initiative and their intended allocations have been declared in
the national budget statement for debate by Parliament …..”
You wouldn’t know that there had been copious references in
Budget Statements after Budget Statement, from 2002 to the
latest one of 2006. And in each instance, the issue had been
debated and parliamentary approval met before disbursements.
Yet, parliamentary approval or not, the “misleading and
inaccurate commentaries on the management of HIPC funds” still
go on, according to the Ministry of Finance.
Was the HIPC Initiative a good policy or not? Apparently, the
doomsday, as predicted, didn’t happen. And now, perhaps, the
objective of the naysayer is to bring disrepute to the result.
The irony in all this is that just worrying about how the freed
resources are being disbursed now implies that something good
has resulted from HIPC, otherwise why bother?
Judging by the way creditor nations are responding to Ghana now,
one could predict that some greater good can come from this
initiative in the near future. The only problem is the worst can
also happen if we continue to undermine the goodwill invested in
the process.
E. Ablorh-Odjidja, Washington, DC, December 1, 2006
Back to
commentary page
|
