A/HRC/23/37 C. Harmful conditionalities 42. In addition to the eligibility criteria for debt relief under the HIPC Initiative, indebted countries have to satisfy a plethora of other policy conditions similar to those imposed through structural adjustment programmes.37 These include privatization of public utilities (sometimes called “public sector reform”),38 deregulation, removal of subsidies (including those that benefit the poor), cuts in public spending, introduction of user fees for public services such as health and education, increases in taxes such as valued-added tax, labour reforms, the promotion of exports and foreign investment, and trade liberalization.39 43. The adverse impact of these policies on the ability of governments to provide basic social services is well-documented.40 While conditionalities can be beneficial, 41 the overwhelming view is that they are ineffective 42 and harmful: they have destroyed livelihoods, increased poverty and inequality and left many poor countries trapped in externally prescribed or approved policy frameworks that not only make it difficult for them to comply with their human rights obligations but also undermine their development and result in further impoverishment of their populations – a result that is inconsistent with debt relief objectives. The experiences of two post-completion point HIPCs (Malawi and the United Republic of Tanzania) are instructive. 37 38 39 40 41 42 The World Bank and IMF claim that the conditions attached to debt relief aim to encourage improved policies and institutions that allow more efficient use of debt relief savings. See World Bank, “Debt Relief and Development,” News and Broadcast online, available from http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:20040942~menuPK:34480 ~pagePK:34370~theSitePK:4607,00.html; and IMF, “IMF Conditionality”, Factsheet (2 April 2013), available from www.imf.org/external/np/exr/facts/conditio.htm. Conditions classified by the World Bank as “public sector reform” are often conditions enabling the legal and policy environment for privatization. See EURODAD, “Untying the knots: How the World Bank is failing to deliver real change on conditionality”, Report (Brussels, November 2007), available from www.eurodad.org. A study of HIPC decision point documents for 26 countries found that all mentioned a previous privatization programme and an ongoing or future privatization process. A total of 15 decision point documents specifically mentioned planned privatization of public utilities or basic services such as energy, water and transport; 23 referred to past efforts to liberalize trade; and 11 indicated a continuing trade liberalization process. See P. Hardstaff, Treacherous Conditions: How IMF and World Bank policies tied to debt relief are undermining development (London, World Development Movement, May 2003), p. 7. See for example, E/1990/5/Add.48, paras. 3 and 35; CEDAW/C/CMR/1; CRC/C/65/Add.18, para. 382; CRC/C/3/Add.62, paras. 121, 134 and 457; CRC/C/KEN/2, para. 30; E/C.12/KEN/1, paras. 6 and 90; CRC/C/70/Add.18, para. 67; E/C.12/BOL/2, paras. 2 and 372; CRC/C/65/Add.2, paras. 35, 36 and 124; E/1990/5/Add.40, paras. 6, 36 and 170; CEDAW/C/HON/6, para. 350; CRC/C/65/Add.28, para. 53; E/C.12/IND/5, para. 4; CRC/C/70/Add.17, paras. 128 and 144; CRC/C/65/Add. 30, paras. 36 and 37; CEDAW/C/BRA/1-5; E/CN.4/2001/53; E/CN.4/2006/44; E/CN.4/2002/59; and E/CN.4/2001/52. See also UNCTAD, Least Developed Countries Report 2002: Escaping the Poverty Trap (2002); UNCTAD, Economic Development in Africa – From Adjustment to Poverty Reduction: What’s New? (2002); Peter Hardstaff, Treacherous Conditions (see footnote 39), p. 5; Jeffrey D Sachs, The End of Poverty: Economic Possibilities for Our Time (New York, Penguin Press, 2005), pp. 81-82, 280-281 and 342; Eric Toussaint, Your Money or Your Life! The Tyranny of Global Finance (London, Pluto Press, 1999), pp. 155-165. For example, trade liberalization may lead to more competition and lower commodity prices. In a 2007 assessment of IMF conditionality, the IMF Independent Evaluation Office concluded that conditionalities neither instigated sustainable policy changes nor assisted countries in meeting the poverty reduction goals agreed with IMF. See IMF, Independent Evaluation Office, Structural conditionality in IMF-supported programmes, Evaluation Report (27 November 2007). 13