New Drive On Poor Country Debt Needed

The debt relief initiative will be a big issue at the Commonwealth finance ministers' annual meeting, which got under way in Bermuda yesterday. The scheme aims to reduce the debt burdens of up to 20 poor countries to sustainable levels.

An analysis prepared by the Commonwealth secretariat argues the rules determining whether a country is eligible to participate are too restrictive. They take too little account of the problems which debt servicing implies for government finances and they are too optimistic about the size of debt burden which countries can sustain relative to their exports, it says.

The report also calls for greater flexibility in the assessment of countries' policy track records. The scheme at present demands two three-year periods of sound policy before full relief is given.

The secretariat says Mozambique and Tanzania have had sound policies for most of the last 10 years, but they might be overly penalised for going