Procedimiento para el cálculo de las adyacencias

The extent to which there are debt service savings due to the HIPC initiative has been challenged, as HIPCs are not in a position to fully service their debt. For example, Cohen (2003) suggests that although the HIPC initiative has brought the average level of the debt-to-export ratio down from 300 per cent to 150 per cent, it is probable that the reduction merely eliminates the non- payable portion of the debt. Birdsall and Williamson (2002, p. 8) report that the United States Government — which is congressionally mandated to estimate the present value of its loan portfolio — applies a 92 per cent discount to the debt of HIPCs.

Chart 4 shows the actual total debt service payments of all 42 HIPCs, as well as of the 22 HIPCs that had reached their enhanced decision point by the end of 2000 (for which comprehensive and consistent data were available up to

Chart 4

TTTTTOTALOTALOTALOTALOTAL DEBTDEBTDEBTDEBTDEBT SERVICESERVICESERVICESERVICESERVICE PAIDPAIDPAIDPAIDPAID, 1990–2001, 1990–2001, 1990–2001, 1990–2001, 1990–2001

Source: World Bank, Global Development Finance, online data 2003.

Billion dollars 0 3 6 9 12 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

First 22 HIPCs All 42 HIPCs

2001). One key observation is that, compared to the early 1990s, the financial impact of the HIPC Initiative on actual total debt service payments is quite marginal. Indeed, actual debt service payments of the 22 HIPCs were slightly higher in 2001 than in 1992, 1993, and 1994. For a group of 27 HIPCs at the decision/completion point, debt service payments have been projected to increase steadily from about $2.4 billion to $2.6 billion between 2003 and 2005 (see tables 12a and 12b).

According to IMF and World Bank calculations, overall debt service of the above-mentioned 22 HIPCs has been cut by roughly one-third, compared with actual payments in the years immediately prior to the receipt of HIPC debt relief. However, these calculations neglect the fact that actual debt service payments in the years immediately prior to reaching decision points was higher than in earlier years, as HIPCs were not allowed to accrue arrears prior to reaching the decision point. For some HIPCs, such as Guinea-Bissau and Tanzania, donor countries provided grants to settle these arrears.

Considering that absolute numbers overstate the debt service burden, charts 5 and 6 show actual debt service payments as percentage ratios of exports and GDP respectively. It can be seen that there are some decreasing trends in the debt service burden relative to exports, though the source for this decreasing

Chart 5

TTTTTOTALOTALOTALOTALOTAL DEBTDEBTDEBTDEBTDEBT SERVICESERVICESERVICESERVICESERVICE PAIDPAIDPAIDPAIDPAID TOTOTOTOTO XGS, 1990–2001 XGS, 1990–2001 XGS, 1990–2001 XGS, 1990–2001 XGS, 1990–2001

Source: Same as for chart 4.

Note: XGS - exports of goods and services.

Percentage 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 0 6 12 18 24 30

First 22 HIPCs All 42 HIPCs

Chart 6

TTTTTOTALOTALOTALOTALOTAL DEBTDEBTDEBTDEBTDEBT SERVICESERVICESERVICESERVICESERVICE PAIDPAIDPAIDPAIDPAID TOTOTOTOTO GDP, 1990–2001 GDP, 1990–2001 GDP, 1990–2001 GDP, 1990–2001 GDP, 1990–2001

Source: Same as for chart 4.

Percentage

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

First 22 HIPCs All 42 HIPCs

3 4 5 6 7

debt service burden lies largely in increased exports.51 _{While similar}

comprehensive data on government revenues are not available, there is some indication that government revenues grew much less than exports but slightly faster than GDP. Hence, the evolution of the debt service burden relative to government revenues is likely to be between the trends shown in charts 5 and 6.

(a) NPV debt reductions lead to continuously

high debt service payments

The HIPC framework stipulates that each creditor is supposed to provide its share of HIPC debt relief, though it does not lay down how each creditor provides its debt relief, which is determined in terms of NPV debt reductions. Given that the key goal of the HIPC initiative is to provide a lasting solution to the problem of repeated debt rescheduling, its clear preference should have been to cancel either a part of the debt stock or at least a part of future debt service payments. However, due to political constraints of some creditors regarding these actions, it was agreed that creditors could provide their NPV debt relief through a rescheduling of debt service. Following previous Paris Club arrangements, this rescheduling applies also to repayments of ODA, which is rescheduled over 40 year (including a 16 year grace period) at original interest rates.

The main problem with such a rescheduling is that it actually increases the total debt service of a country in the long-term. Hence, though HIPC debt relief provided through rescheduling reduces debt service payments in the short term, it puts most debt service payments off to the future and will thus undermine long-term debt sustainability (especially if combined with overly optimistic growth rates, as is the case under the Initiative).52 _{Unfortunately, this}

rescheduling problem is largely ignored or misinterpreted in the debt literature. A debt rescheduling may be appropriate for borrowers with temporary payment (i.e. liquidity) problems, but it is no solution for HIPCs’ debt overhang, the causes of which are structural in almost all cases (i.e. insolvency). On the contrary, a debt rescheduling makes the situation worse for HIPCs, as it increases the cumulative amount of debt service payments.53

Chart 7 shows the projected annual debt service of the 27 decision-point HIPCs for 2003-2005.54 _{Considering that nearly all of these 27 HIPCs are}

expected to have reached their completion point by the end of 2004, it is surprising to see that nominal debt service is projected to increase between 2003 and 2004. An examination of the weighted average debt service projections in terms of exports and government revenues (charts 8 and 9) reveals clearly declining trends, though at least part of these trends is due to overly optimistic growth rates for exports and government revenues. Furthermore, as table 13 shows, the picture looks far less promising for the remaining NPV debt levels of a number of individual HIPCs.

Chart 7

PPPPPROJECTEDROJECTEDROJECTEDROJECTEDROJECTED DEBTDEBTDEBTDEBTDEBT SERVICESERVICESERVICESERVICESERVICE ONONONONON PUBLICPUBLICPUBLICPUBLICPUBLIC EXTERNALEXTERNALEXTERNALEXTERNALEXTERNAL DEBTDEBTDEBTDEBTDEBTaaaaa

Source: Graphs created by UNCTAD based on IMF and World Bank (2003a); see tables 12a and

12b.

a 27 decision-point HIPCs, as of June 2003.

Million dollars 2 423.2

2 467.6

2 566.7

Chart 8

PPPPPROJECTEDROJECTEDROJECTEDROJECTEDROJECTED DEBTDEBTDEBTDEBTDEBT SERVICESERVICESERVICESERVICESERVICE ONONONONON PUBLICPUBLICPUBLICPUBLICPUBLIC EXTERNALEXTERNALEXTERNALEXTERNALEXTERNAL DEBTDEBTDEBTDEBTDEBT TOTOTOTOTO PROJECTEDPROJECTEDPROJECTEDPROJECTEDPROJECTED EXPORTSEXPORTSEXPORTSEXPORTSEXPORTSaaaaa

Source: Same as for chart 7.

a 27 decision-point HIPCs, as of June 2003.

9.2 8.4 8.1 2003 2004 2005 Percentage Chart 9

PPPPPROJECTEDROJECTEDROJECTEDROJECTEDROJECTED DEBTDEBTDEBTDEBTDEBT SERVICESERVICESERVICESERVICESERVICE ONONONONON PUBLICPUBLICPUBLICPUBLICPUBLIC EXTERNALEXTERNALEXTERNALEXTERNALEXTERNAL DEBTDEBTDEBTDEBTDEBT TO

TO TO TO

TO PROJECTEDPROJECTEDPROJECTEDPROJECTEDPROJECTED GOVERNMENTGOVERNMENTGOVERNMENTGOVERNMENTGOVERNMENT REVENUESREVENUESREVENUESREVENUESREVENUESaaaaa

Source: Same as for chart 7.

a 27 decision-point HIPCs, as of June 2003.

Percentage

13.4

12.5

11.7

3. Is HIPC debt relief additional