THE WHITE HOUSE
Office of the Press Secretary
PRESIDENT CLINTON ANNOUNCES NEW U.S. INITIATIVE ON DEBT March 16, 1999
President Clinton today called on the international community to pursue a comprehensive approach to debt relief for the heavily indebted poorest countries -- the HIPCs -- which, if fully implemented by creditors and the HIPCs, could result in forgiving an additional $70 billion in debt.
Today's proposal extends the U.S. commitment to providing more relief, more quickly to a broader range of heavily indebted poor country that have strong reform programs.
The following are key elements of President Clinton's initiative, and the US will work with its colleagues in the G7 to implement these proposals:
Front Loaded Relief: Focus on early cash flow relief by the international financial institutions, in conjunction with ongoing forgiveness of cash flows by the Paris Club, to accelerate relief from debt payment burdens without undermining the incentive for sustained economic performance. Deeper Debt Reduction: Complete forgiveness of bilateral concessional loans, rather than rescheduling as is done at present; forgiveness of bilateral non-concessional debt up to 90%; and in exceptional cases on a broader base of debt. Avoid Future Debt Problems: Seek international commitment to provide at least 90% of new aid to HIPC countries on a grant basis. Exceptional Relief in Exceptional Cases: Deeper debt reduction in exceptional circumstances to those countries where it can make a real difference. Innovative Approaches: To channel resources from HIPC receiving debt reduction from debt service into education or environmental protection, using innovative financial instruments like debt-for-nature swaps; and take new approaches to promote reconstruction in countries emerging from protracted conflicts; New Financing: Gold sales by the IMF, additional contributions to the World Bank's HIPC Trust Fund and other creative approaches to help meet the costs of this initiative.
If all HIPC-eligible countries qualify, these proposals would reduce an additional $3 billion in U.S. bilateral debt than under the current HIPC initiative and would leverage almost $70 billion in additional debt relief from other creditors.