Rich nations grant poorest 22 a checkbook reprieve

The World Bank and IMF meet their goal of granting debt relief by end of the year.

The campaign to write off Third World debt has received a shot in the arm with a Christmastime announcement that the world's richest nations will forgive some $34 billion in loans to 22 poor countries, mostly in Africa.

The World Bank and International Monetary Fund revealed the plan late Friday, meeting a self-imposed deadline of granting debt relief to at least 20 countries by the end of 2000.

"The countries concerned have shown their willingness to put debt relief to effective use to improve the lives of the poor," said a statement by World Bank president James Wolfensohn and IMF managing director Horst Kohler. "They have formulated strategies to reduce poverty, to invest in their people's future, and to create the basis for sustained growth in their countries."

Many developing countries are currently crippled by huge debts that most observers say are unpayable. For instance, Zambia - one of the countries eligible for the new relief - owes $5.5 billion, nearly twice its annual gross national product. It faces yearly debt-service payments of $168 million, and spends just $70 million annually on education and $76 million on health.

Debt-relief activists say the payments from poor countries' coffers condemn children to poor education, women to ill health, and men to unemployment, while making a mockery out of the West's aid programs.

Such activists are welcoming the announcement with a degree of skepticism. The new program will not forgive all loans to the 22 countries, but instead wipes out less than half their debts, and only after they meet certain conditions over the coming years. Said Mr. Wolfensohn and Mr. Kohler: "The beneficiary countries must continue with their economic, social, and governance reforms." Nor does the new program do anything for another 19 heavily indebted countries, which the bank and the fund say are not ready for debt relief.

Although the two international financial institutions began their Highly Indebted Poor Countries initiative four years ago, so far only one country - Uganda - has actually seen any debt written off.

"The debt-relief scheme is beginning to move, but debt payments will still be too high," says Ann Pettifor, director of Jubilee 2000, the British charity leading the global push for debt relief.

Jubilee 2000's mandate was to push for debt cancellation by the end of this year. It is closing up shop in name only and metamorphosing into Drop the Debt, a campaign focused on getting a better debt-relief deal at next year's summit of the Group of Seven leading industrial countries. "Unless the G-7 rewrite the rules, there is no chance of this scheme providing an end to the debt crisis for the poorest countries," says Ms. Pettifor.

Jubilee 2000 is partly responsible for the fact that debt relief has increasingly been on the international agenda. Its campaign has taken place from the boardrooms of Washington to the streets of Prague and attracted the endorsement of such celebrities as Bono, of the rock band U2, and former world boxing champion Muhammad Ali.

But the agency is not claiming victory. "Although we have pushed debt cancellation to the top of the agenda, creditors have failed to end the debt crisis," says Pettifor. "The poorest countries will still be forced to take new loans or use aid money just to repay debts."

The African countries that will receive debt relief under the new World Bank/IMF program are Benin, Burkina Faso, Cameroon, Gambia, Guinea, Guinea-Bissau, Madagascar, Malawi, Mali, Mauritania, Mozambique, Niger, Rwanda, Sao Tome and Principe, Senegal, Tanzania, Uganda and Zambia. The others are in Latin America: Bolivia, Guyana, Honduras, and Nicaragua.

(c) Copyright 2000. The Christian Science Publishing Society

About these ads
Sponsored Content by LockerDome

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.

Loading...

Loading...

Loading...

Save for later

Save
Cancel

Saved ( of items)

This item has been saved to read later from any device.
Access saved items through your user name at the top of the page.

View Saved Items

OK

Failed to save

You reached the limit of 20 saved items.
Please visit following link to manage you saved items.

View Saved Items

OK

Failed to save

You have already saved this item.

View Saved Items

OK