Norway to Extend Debt Relief Strategy for Developing Countries

"The Government is now extending the debt relief strategy to include a larger number of heavily indebted developing countries. Extending the strategy will enable us to support more countries suffering from severe poverty problems as well as countries emerging from war and conflict. This will enable Norway to cancel all of these developing countries' old debts. Norway will also, together with other countries, continue to support the HIPC initiative," said Minister of International Development Anne Kristin Sydnes.

"Towards the Year 2000 and Beyond: the Norwegian Debt Relief Strategy", which was launched in 1998, put Norway at the forefront of international debt relief efforts. Since then, many other countries have devised their own debt relief initiatives. By extending the debt relief strategy, Norway will both maintain its leading position in this field and be in a position to influence international debt relief policy.

The Norwegian debt relief strategy of 1998 focuses on the very poorest developing countries. The developing countries themselves have long called for debt relief for highly indebted medium-income countries with severe poverty problems, such as Ecuador and Peru. The Government is now paving the way so that Norway can, under certain conditions, cancel the debts of such countries as well. In these cases, debt swapping is the internationally recognized tool, preferably coordinated with other creditor countries. Through debt for development swaps, Norway and other creditor countries will be able to cancel whole debts or parts of them in return for local currency being invested in development or environmental projects in the debtor country. It will now be possible for Norway to work to promote such multilateral debt swaps. The condition is that the debt swapping operations are in keeping with the country's own development strategy and that the debt relief benefits the debtor country, and not other creditors.

Experience has shown that poor countries emerging from a protracted conflict situation have a great need for budget support in order to secure stability. "It is extremely important to find a solution to these countries' debt problems at the point when the situation in the country is returning to normal and a legitimate government takes power," stressed Ms. Sydnes. "The debt relief granted by Norway to such countries will be in keeping with international guidelines and be based on an assessment of the political situation. This will apply to such countries as DR Congo, Liberia, Sudan, Sierra Leone and Yugoslavia."