One Year on from 2005 and the office door is not closed at Debt and Development Coalition Ireland, and I wonder WHY?

In June / July 2005, while campaigners and social movements rallied for Justice throughout the world, the G8 world leaders gathered for a photo opportunity outside Gleneagles, Scotland to announce their plan for ‘a historic deal’ of 100% debt cancellation for the poorest nations in our world, an increase in Overseas Development Aid and to make changes to international trade policy.

One year later, it’s important to look back and ask:

What Has Been Achieved?

The 2005 debt agreement was an important milestone. For the first time, the IMF and World Bank were forced to accept the principle of 100% debt stock cancellation, for years a constant demand of the Coalition and campaigners throughout the world

One year later, on 1st July 2006, the World Bank and Africa Development Bank started to deliver debt cancellation to 19 impoverished nations, 15 of which are in Sub-Saharan Africa. This is one full year following the announcement of the ‘historic deal’, during which time these countries have continued to make debt service repayments to these institutions.

The IMF delivered its share (US$3.3bn) of the debt cancellation six months earlier, on 6 January 2006. The debt deal means that each year, over the next ten years, these 19 countries will save between them around US$1.1bn in debt service repayments - money that can be used instead to invest in health, education and infrastructure. But did campaigners feel this deal really went far enough?

Did the ‘historic deal’ cover 100% of poor countries and 100% of debts?

It covered neither 100% of countries nor 100% of debts. No country will receive the claimed ‘historic deal’ of the full 100% debt cancellation. 2005 saw rich country governments and the World Bank squabble over the details. The World Bank was not convinced that the donor countries ( rich governments) would fulfill the financial commitments necessary to ‘cash in’ the promised 100% debt cancellation. So the World Bank ‘clawed back’ on one year of the promise, which means that the ‘historic deal’ will see the World Bank holding back US$5b of the original deal from the poorest nations of our world!

When is 100% Not 100%

For 15 of the 19 HIPC countries based within the Africa continent, which were promised 100%, the picture is mixed:

Uganda will have the largest proportion of its debt cancelled i.e. 79%, followed by Ghana at 76%, and Tanzania and Zambia (both at 74%). The two Sub-Saharan African countries which will see the least reduction in percentage terms are Mali with a 56% reduction and Mozambique with a 48% reduction, principally because these two countries owe money to creditors other than the IMF, World Bank and African Development Bank.

In Latin America, the picture is even gloomier. On average, the 4 Latin American HIPCs will see less than one-third of their debts written-off, thanks to the exclusion from the G8 deal, of the Inter-American Development Bank, one of Latin America’s most important creditors.
Guyana languishing at the bottom, will see its debt reduced by only 21%, Nicaragua by only 23%, Honduras by 28% and Bolivia by 31%. So much for 100% debt cancellation!

Justice not Charity

This was a common theme during the rallies and pop concerts leading up to the G8 summit. Many countries in the Southern Hemisphere are starving for justice for their people. Here are a few examples of what can be achieved if justice prevails for the poorest nations of our world:
In Ghana, the ‘money saved’ is being used for basic infrastructure,
including rural feeder roads, as well as increased expenditure on education
and health care.

In Tanzania, the government is using the money saved to import vital
food supplies for those affected by drought.

In Zambia, 4,500 new teachers have been hired and fees for rural healthcare have been abolished.
Debt cancellation does make a real difference in peoples’ lives.

Where now for Debt Campaigners?

Debt Campaigners need to be vigilant, while media coverage and Governments may be inclined to argue that “debt is done”. The fact remains that many more countries (beyond the 19 presently benefiting from Debt Cancellation), are in need of debt cancellation to meet human development needs and targets such as the 2015 Millennium Development Goals (to half extreme poverty etc). Over 100 countries in the Southern Hemisphere are in this category.

While the peoples in the Southern Hemisphere are forced, through IMF/World Bank economic policies and lack of Western political will, to live on less than €1 a day, the Coalition will not be closing its door.

See also:
G8 Debt Deal One Year On: What Happened and What Next?
EURODAD Report
June 2006
Dowload here PDF

See also the following article from Jubilee Debt Campaign UK:

The Multilateral Debt Relief Initiative: The good, the bad and the ugly!
Dowload here PDF