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Eleven of these 22 countries benefited from an average 40 percent reduction in debt payments in the Jubilee year, with the rest of the relief for them and for the remaining countries to come this year, according to the creditor institutions. These international financial institutions—the International Monetary Fund (IMF), the World Bank, and others collectively known as IFIs, this year aim to relieve poor countries of another $36 billion in debt, which would bring the total to $70 billion for 31 countries.

Ignoring the Jubilee proposal, the IFIs have embedded economic restructuring into terms of the write-offs, slowing down the rate at which poor countries are granted debt relief. The IFIs are not sure countries will meet the prerequisites to reach this year's goal. Creditor institutions anticipate that the leading industrialized (G7) countries will fulfill their pledges to cancel 100 percent of their bilateral (nation-to-nation) debt, but they are not expecting to write off more than their $70 billion commitment this year. Moreover, the U.S. Treasury Department unofficially has sent signals that it will not support further write-offs.

Jubilee (from the Hebrew Yôvel, "ram's horn" or "trumpet") is rearming itself to confront this entrenched political mindset. Coalition organizers are still striving for $100 billion in write-offs and are outraged that debt relief has not been swift, deep, or broad enough. "In spite of the advances that have been made, the whole movement of debt cancellation is moving very slowly," Dan Driscoll-Shaw, until recently national coordinator of Jubilee 2000 USA, told CT.

"From a moral and economic point of view, $100 billion in debt relief is realistic this year. From the viewpoint of political will, I don't know if it's realistic but we're going to go after it," Driscoll-Shaw says.

U.S. support for debt cancellation was symbolically important for getting other government creditors to accept the write-offs, but Congress's contribution for IFI debt-relief funding was comparatively tiny. And most of the poor countries' nation-to-nation debt, it turns out, is owed not to the United States but to Asian and European states.

The United States is the largest contributing member of the IMF at 60 percent of funds (considering exchange rate values), so one might want to argue it is bearing the brunt of the IFI's write-off. But the cost of funding the ifi debt relief came from new, not existing, funds—hence the battles in Congress and in other G7 capitals last year.

Grasping just how small the U.S. cost was requires understanding that the $70 billion in debt relief got recast into "Net Present Value" terms—a complicated discounting trick that replaces debt's face amount with its current market value. Thus, to creditors, $70 billion in debt morphed into just $28.6 billion to cancel it.

Strange as this may sound, it underscores the accounting reality that debt does not disappear when it is forgiven; someone has to cover the loss to the creditors (even if all parties realized the debt was never going to be repaid anyway). One way IFIs covered this cost was to sell IMF gold stocks—a victory for Jubilee campaigners. The main way, however, was getting member nations of the IMF and World Bank to contribute additional funds because these institutions said they couldn't afford to take the hit (a hotly disputed claim).

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May 21 2001, Vol. 45, No. 7