Many poor countries must devote huge portions of their national budgets to paying back foreign creditors -- often for loans that were made to or for dictators, wasteful military spending or boondoggle projects. The poor countries of sub-Saharan Africa, for example, owe more than $200 billion in foreign debt -- three times more than they earn annually in exports. About 20 percent of sub-Saharan African countries' export income (not counting South Africa) goes to service foreign debt.

A huge part of poor country economies must be devoted to producing goods for export -- with the resultant income sent back out of the economy and not available for domestic use, including for such important domestic needs as healthcare, education and infrastructure.

The IMF program for helping poor countries that are deeply in debt was, until recently, called the Enhanced Structural Adjustment Facility (ESAF). Last year, under fire for a program poorly run, the Fund changed the name to Poverty Reduction and Growth Facility (PRGF). This program is operated in conjunction with the World Bank's Heavily Indebted Poor Country (HIPC) Initiative.

The purpose of PRGF/HIPC is to provide some debt relief -- that is, to cancel part of the debts -- for poor countries that have no hope of paying back their foreign debt and for whom debt payments are draining their economy.

However, the debt relief afforded by PRGF/HIPC is very modest, and will leave most poor countries paying nearly as much as they currently do. Under the plan, many countries find that while the absolute amount of their debt may decline, only about 15 countries will see the amounts they actually pay affected meaningfully.

As Joe Hanlon, a Jubilee 2000 UK analyst, explains, "Of the $207 billion HIPC country debt, approximately $100 billion is not being serviced -- mainly with the agreement of the IMF and World Bank … . This means the Bank and Fund have already admitted that this money will never be paid. So the $100 billion now on offer is only equivalent to the money that it is already accepted will never be paid -- in effect this much debt can be written off without real cost since it would never have been paid."

Compounding the problem, the price of receiving debt relief under the PRGF/HIPC program is implementing a carefully supervised structural adjustment program for three years -- even though structural adjustment programs worsen poverty.

The IMF and the World Bank should use their existing resources to fully cancel the debts owed them by the poorest countries -- without any structural adjustment conditions attached. This is something they are perfectly able to do, as Harvard Professor Jeffrey Sachs and many others have shown.