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Copyright 1999 InterPress Service, all rights reserved.
Worldwide distribution via the APC networks.
*** 22-Dec-99 ***
Title: FINANCE: British Debt Relief 'A Drop in the Ocean'
By Julian Lee
LONDON, Dec 22 (IPS) - The debt-relief initiative for developing
countries announced last weekend by the British government is ''a drop in
the ocean,'' Christian Aid, a leading development non-governmental
organisation said.
"What we [the UK] have done is a drop in the ocean. The other
leading industrial nations are still chasing their debts, as is the World
Bank," Christian Aid's director Daleep Mukarji said.
Christian Aid estimates that 288 billion dollars must be
forgiven if the United Nations target of halving world poverty by 2015 is to
be met, and is launching a campaign to ensure that a decision on the
cancellation of debt by the leading industrial nations is made at the next G8
summit meeting in Japan, in July 2000.
The G8 comprises the world's seven most industrialised
countries and Russia.
Bolivia (17.6 million dollars), Uganda (9 m), Mauritania (11 m)
and Mozambique (144 m) are the first countries to have their debts to
the British Government cancelled as part of the relief programme to
Chancellor (Finance minister) Gordon Brown announced here Tuesday.
Up to seven more countries, the names of which are to be
confirmed at the International Monetary Fund's (IMF) next meeting in April,
will also see their debts to the UK written off.
Tanzania (182 m), Mali (6.5 m), Benin (4.3 m), Senegal (2.4 m),
Burkina Faso (1.6 m) Guyana (70.4 m) and the Ivory Coast (35.2 m) are
understood to be the next beneficiaries.
The initiative will see the total of 3.04 billion dollars owed
to British commercial companies under the Export Credit Guarantee
Department (ECGD) - the body responsible for underwriting commercial debts
being met by UK Government over a period of 20 years.
Although the removal of the debt burden will come as a welcome
relief to those countries, the figure is tiny compared to the overall figure
of 256 billion dollars that is owed by those countries to the World
Bank, IMF and the international community as a whole.
Aid agencies and non governmental organisations estimate that
the figure in this latest announcement by London amounts to 1,040 million
dollars- which is part of the 3.04 billion owed to the UK under this item.
The total owed to the UK by the 41 HIPC countries amounts to
eight billion dollars. This would normally be guaranteed by the ECGD.
Because the calculation of figures often swings between nominal and present
values it is hard to obtain a definitive figure.
By the end of next year the UK Government hopes to have over
25 countries qualifying for debt relief under this programme which
will effectively mean that no more developing countries will owe money
to the UK Government.
UK Chancellor Gordon Brown's original plans were to restrict
debt relief to 25 countries.
The target has now been extended to ensure that at some point
in the ''near future'' all the those countries that were signatories to
the 1996 Heavily Indebted Poor Countries (HIPC) agreement, allowing them a
'sustainable exit' from debt, will have their debts cancelled.
However, the initiative will undoubtedly put pressure on the
other members of the G7 to follow suit, as agreed at a summit held last
June in Cologne (Germany).
In a speech in October President Bill Clinton signalled his
commitment to scrap the debt owed to the USA by the HIPC countries.
"This is welcome news," says Oxfam's policy director Justin
Forsyth.
"It revitalises the debt initiative that was in danger of
stalling. The challenge now is to convince the debt doubters like Germany,
France and Japan to do the same."
France, Japan, Germany and Italy, all of whom have been accused
of dragging their feet over the issue, will now face renewed pressure
to capitulate and follow the lead.
France announced last weekend that it would cancel official
debts for some 6.150 million dollars between 2000 and 2001.
The countries that were chosen to head the UK's list - Bolivia,
Uganda, Mozambique and Mauritania - have already demonstrated their
commitment to use the money that would normally have gone to servicing their
debt on social programmes and poverty reduction.
Uganda, for example, has put money into primary education and
since getting debt relief an extra two million Ugandan children are now
in school. Bolivia, meanwhile, has concentrated its efforts on trying
to eradicate infant mortality and poverty.
Those countries that are unable to meet the criteria - or, as
one aid policy director put it, ''go through the hoops'' - are unlikely to
find themselves on the fast track to debt relief.
Although the move has been seen as a step in the right
direction some agencies are critical of the conditions - the same as those laid
down by the IMF - that have been leveraged on the countries who are being
fast tracked to debt relief.
The criteria state that countries have to push their economy to
a status of low inflation, maintain political stability and ensure that a
policy of privatisation is being pursued in industry in order to qualify.
They also have to undertake civil service reform, impose wage
freezes and enforce tight economic control, all of which can contribute to
making a country's short term recovery a painful process.
A recent report by Christian Aid - entitled 'Millennium Lottery -
Who lives and who dies in an age of Third World Debt' - has identified
the HIPC conditions as being responsible for squeezing local economies.
It says that half of Zambia's physicians have fled he country
in search of work abroad because of job cuts. Uganda's Ministry of Health
recently said that because of wage freezes the country does not have the
staff on the ground to carry out the government's immunisation policy.
Doubt over Nigeria's position still remains. With debts of 5.6
billion dollars, Nigeria is the UK Government's largest debtor but is not
a member of the HIPC scheme and is therefore unable to qualify under the
new proposals put forward by Brown.
Were Nigeria's debt to be removed it would be seen as a
political statement by the Government to lend the new government a helping
hand as it steers the country out of a period of dictatorship and financial
mismanagement.
However, such a move could prove to be an unpopular one with
HIPC members who have been patiently waiting in line to qualify for
debt relief.
(END/IPS/eu wd ie dv/jl/ak/99).
Origin: Rome/FINANCE/
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[c] 1999, InterPress Third World News Agency (IPS)
All rights reserved
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