Oxfam calls for better debt management

The World Bank and the IMF are "exaggerating" how much their flagship debt relief programme has reduced the loans burden on the world's poorest nations, a report by Oxfam claims today. The report shows that several countries are leaving the programme paying more to their creditors than before they entered it.

The aid agency is calling for radical reform of the heavily indebted poor countries initiative (HIPC), which it says has failed to deliver real benefits to some of the world's most impoverished nations.

Most countries will still be paying more to their western creditors than they do on health and education and some will actually see their interest payment rise on completion of the debt relief programme. Oxfam figures show that Tanzania, Zambia and Senegal will be paying more to the Bank and the IMF after debt relief than before, and that the annual budget savings for other countries will be "modest".

"It is economically ruinous and morally indefensible for Zambia to spend 40% of its budget paying back the rich world when chronic malnutrition of its children is on the rise and 73,000 die each year before the age of five," said Kevin Watkins, senior policy analyst at Oxfam, and the report's author. "The debt relief package urgently needs root and branch reform.It was de vised to reduce poverty but in some cases it will have limited benefits for the poor."

Oxfam says that the Bank and IMF claim that HIPC has wiped $28bn(£20bn) off poor country debts as "grossly exaggerated".

Western leaders will face pressure to offer a better deal on debt relief at this week's annual meetings of the Bank and IMF in Prague. The city is bracing itself for large protests with debt one of the concerns motivating the demonstrators.