WASHINGTON A plan to slash the debts of the world's poorest countries is off track and is likely to face further problems this year, a World Bank and International Monetary Fund study has found.

The report, a copy of which was obtained by Reuters, found that eight to 10 countries will still have debt problems by the time they finish the heavily indebted poor countries (HIPC) program, twice as many as was expected in April last year.

In addition, only one country out of an expected five reached the end of the program in late 2001.

"Fewer countries than expected reached their completion points during the review period," said bank and fund said in a joint report which may be revised before discussion at the two institutions' annual meetings this weekend.

"The implementation of the initiative in 2002 will continue to face challenges."

Of the countries currently on the program, several have had problems meeting the performance targets laid out in their poverty reduction plans as agreed with the IMF.

Since the end of last year, the fund has halted interim debt relief - debt forgiveness granted before a country finishes the program - to seven countries because of failure to meet the targets.

Meeting the program has become even more tricky in the weak global economic environment and particularly because of low commodity prices which virtually all hipcs depend upon for income, the study said. Meanwhile, other countries are stuck because they are at war or in conflict.

A spokesman for the bank said the fact that Ethiopia and Sierra Leone have made it on to the program, are evidence that the HIPC initiative is still moving forward. And because many of the countries waiting to join the program are still in conflict, progress seems slower.

"We're very serious about moving forward with different countries, even ones that are recently out of conflict," said Tony Gaeta.

"We won't be coming forward with a raft of new countries. There's only a dozen left so you have to look carefully at what's left on the list."

The countries that still have not made it on to the program include Sudan which is mired in an 18-year old war, and the Democratic Republic of Congo, which has also been dogged by rebel fighting.

Overall, five countries have graduated from the HIPC program. These are Uganda, Bolivia, Mozambique, Tanzania, joined last week by Burkina Faso. The report said that Bolivia and Uganda, may actually need some further help, even though they completed the program.

More Cash Needed

The charity, Oxfam, said the report was disappointing and called for urgent action by donors to open their wallets and get the program back on the right path.

"These countries need to urgently receive increased debt relief," said Oliver Buson, a policy adviser at the charity's Washington branch.

"Debt service is still far too high and is undermining progress toward the millennium development goals which include universal basic education for all children."

At a conference in Monterrey last month, heads of state including U.S. President George W. Bush reconfirmed their commitment to the goals which aim to crack down on poverty by 2015.

Buson also said the IMF needs to be more flexible so countries will not have interim debt relief from the fund suspended if the targets are missed.

The report itself recommends a discussion of the costs of topping up the debt relief for countries that still have debt problems at the end of the program this weekend when the

Last week, Burkina Faso became the first country to get a top-up in debt forgiveness. The bank and fund have said countries should get a boost if it can be proved that their programs went off-track because of "exogenous circumstances". There has been debate about what these circumstances would be but in the case of the african nation it was weak commodity prices.

The report also suggests other creditors outside current group involved in HIPC should give debt relief and existing creditors to make good on their promises.