What Is the G8 Offering?
The G8’s proposal would cancel the debts of 18 countries that have reached so-called completion point under the Heavily Indebted Poor Countries (HIPC) Initiative (1). An additional nine HIPC countries may become eligible for cancellation in the next two years if they reach completion points (2). Significantly, the cancellation will include debts these countries owe to the IMF, World Bank, and the African Development Bank, which constitute an especially burdensome portion (3). Next, the proposal will be tabled for approval by the shareholders of the IMF and the World Bank—among whom donor countries have the deciding influence—at the annual meetings in September. The loophole of the deal is in the full-circle transaction that links debt cancellation with aid reduction and conditionality. Under the proposal, all of the debt that a country pays to the International Development Association, the concessional lending arm of the World Bank, will be cancelled—but simultaneously, the donors will
