Chase Manhattan Corporation – International Lending (1999 – 2000)
WHEREAS: The Heavily Indebted Poor Countries (HIPC) program, which was established by the World Bank and the IMF in 1996 to address both the unpayable character and the social consequences of the debt overhang in lesser developed nations, has been sharply criticized for being too little, too late, too limited, too rigid and too unrealistic.
WHEREAS: The leaders of the major industrialized countries at their G-7 summit in June 1999 endorsed a new initiative to enable these countries to receive broader, faster debt relief by calling on International Financial Institutions to develop a framework for linking debt relief with poverty reduction that centers around better targeting of budgetary resources for priority social expenditures for health, child survival, aids prevention, education and greater transparency in government budgeting. WHEREAS these debt relief initiatives should require the government of the country receiving debt relief to establish a human development Fund through transparent and participatory processes including civil society, the resources of which Fund to be dedicated to reducing the number of persons living in poverty, expanding access of the poorest members of society to basic social services, including education, health, clean water and sanitation.
WHEREAS: The G-7 also proposed lowering the threshold for relief to countries whose debt-to-export ratio exceeds 150%, which expanded the number of countries from the 41 of HIPC to a total of 46; of these 46 countries, 35 are in Africa. These 5 added countries are Bangladesh, Cambodia, Comoros, Haiti and Malawi. WHEREAS the G-7 has called for total cancellation of all bilateral concessional debt and asked for forgiveness of certain commercial debt, including defaulted loans under the cover of bilateral export-import agencies.
WHEREAS: U.S. banks hold total cross-border claims on the HIPC+5 countries amounting to $1.4 billion as of the end of 1998, with an estimated $0.4 billion to $0.5 billion subject to debt cancellation, being without guarantees and in the public banking sectors.
WHEREAS: Webelieve that our corporation should follow the initiative of the G-7 to help promote a more transparent and businesslike structure in these countries as well as to help promote human development by developing policies for debt cancellation of and future lending to these very heavily indebted countries
RESOLVED: that the Shareholders request the Board of Directors of Chase to develop a policy for the cancellation of debt and new lending to the 46 HIPC+5 countries. The policy should include: – The debt to be cancelled should include government and bank-sector debt of medium and long-term original maturity without external guarantees, as well as government and bank-sector short-term debt without external guarantees that has been converted into medium and long-term debt. – Conditions for cancellation should include country requirements that the savings from the cancellation should be used by the indebted nation to supplement present human development funding. – Conditions for new lending should include transparency and accountability in the use of these new funds.