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Topic A: Debt Relief

Debt Relief was bought onto the World Bank agenda in the late 1990’s and the Heavily Indebted Poor Countries (HIPC) initiative was launched to provide systematic debt relief for the poorest countries, whilst trying to ensure the money would be spent on poverty reduction. The HIPC program has been subject to conditionalities similar to those often attached to IMF and World Bank loans, requiring structural adjustment reforms, sometimes including the privatization of public utilities, including water and electricity. To qualify for irrevocable debt relief, countries must also maintain macroeconomic stability and implement a Poverty Reduction Strategy satisfactorily for at least one year. The Multilateral Debt Relief Initiative (MDRI), agreed upon in July 2005, is an extension of HIPC.  It offers 100% cancellation of multilateral debts owed by HIPC countries to the World Bank, IMF and African Development Bank.

However, there are several arguments against the debt relief initiatives. Opponents of debt relief argue that it is a blank cheque to governments, and fear savings will not reach the poor in countries plagued by corruption. Others argue that countries will go out and contract further debts, under the belief that these debts will also be forgiven in some future date. They use the money to enhance the wealth and spending ability of the rich, many of whom will spend or invest this money in the rich countries, thus not even creating a trickle-down effect. They argue that the money would be far better spent in specific aid projects which actually help the poor. They further argue that it would be unfair to third-world countries that managed their credit successfully, or don’t go into debt in the first place, that is, it actively encourages third world governments to overspend in order to receive debt relief in the future. Others argue against the conditionalities attached to debt relief. These conditions of structural adjustment have a history of widening the gap between the rich and the poor, as well as increasing economic dependence on the global North. Further arguments assert that the principal obstacle to investment and growth in the world’s poorest countries is a lack of basic economic institutions that provide the foundation for profitable economic activity. If the goal is to help poor countries build the institutions that best suit their development needs, then the energy and resources currently devoted to the HIPC initiative could be more effectively employed as direct foreign aid.

In light of such arguments, this committee will be focusing on agreeing upon conditions and safeguards, which will ensure the most effective use of funds. Other issues which will be open to debate include the status of countries being considered for the above initiatives and whether the heavily-indebted (but not so poor) Less Developed Countries, such as Pakistan and Turkey, should be considered for such initiatives or not. If so, then what should be the conditions attached and who will be benefiting from them?

Topic B: Anti Corruption

In lieu of the latest goal of the World Bank, that is, eradication of poverty, tackling corruption has become one of the foremost items on the committee’s agenda. It is believed that corruption is amongst the greatest obstacles to economic and social development. It undermines development by distorting the rule of law and weakening the institutional foundation on which economic growth depends. The harmful effects of corruption are especially severe on the poor, who are hardest hit by economic decline, are most reliant on the provision of public services, and are least capable of paying the extra costs associated with bribery, fraud, and the misappropriation of economic privileges. Corruption sabotages policies and programs that aim to reduce poverty, so attacking corruption is critical to the achievement of the Bank’s overarching mission of poverty reduction. It is believed that an effective anti corruption strategy builds on five key elements:

1.    Increasing Political Accountability
2.    Strengthening Civil Society Participation
3.    Creating a Competitive Private Sector
4.    Institutional Restraints on Power
5.    Improving Public Sector Management

To reduce the corrosive impact of corruption in a sustainable way, it is important to go beyond the symptoms to tackle the causes of corruption. This committee will delve deep into these root causes and formulate effective anti corruption programs and governance initiatives which can then be implemented in member countries, especially in those whose administrative infrastructure and economy has been crippled by this heretofore unassailable menace.