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The Lutheran World Federation
Lutheran World Information |
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| 05.07.2005 |
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| LWF General Secretary Calls for Extension of Debt Relief Program as Agreed upon by G8 Member Countries |
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Debt Cancellation Initiative a Significant Breakthrough, but Not Yet a Solution
GENEVA, 5 July 2005 (LWI) - The General Secretary of the Lutheran World Federation (LWF) and Convenor of Inter-Faith Action for Peace in Africa (IFAPA), Rev. Dr Ishmael Noko, has called on the British Chancellor of the Exchequer, Gordon Brown, to take steps to extend even further the debt relief program for poor countries announced last month. The agreement was reached in the lead up to the next Group of Eight (G8) Summit due to start on July 6 at Gleneagles, Scotland, chaired by the United Kingdom.
In a letter to the British Chancellor, Noko calls the new debt cancellation initiative "a significant breakthrough," but "not yet a solution." He encourages Brown to stay committed to the debt cancellation process. "If the momentum which it has created can be built upon and the wider dimensions of the problem addressed, a more complete and sustainable resolution of the debt crisis may yet be within reach," Noko says.
In June, the finance ministers from the world's wealthiest nations, Canada, France, Germany, Italy, Japan, Russia, the United Kingdom, and United States of America, agreed on canceling 100 percent of the debt, worth USD 40 billion, owed to the major international financial institutions by 18 of the world's poorest countries.
The countries immediately benefiting from the debt relief are Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania, Uganda and Zambia. All of them have completed the Heavily Indebted Poor Countries program (HIPC), which is based on criteria laid down by the World Bank and the International Monetary Fund. Launched in 1996 as a first comprehensive approach to reducing the external debt of the poorest countries, the program was reviewed three years later, and enhanced to provide deeper debt relief.
Noko points out that there are many other countries, some of which are excluded from the HIPC altogether, requiring cancellation of their multilateral debts in order to have at least a chance of achieving their Millennium Development Goals. "All of the countries that need debt cancellation should receive it," he states.
Noko stresses that all of the unsustainable and/or illegitimate debts of these countries should be cancelled. He expresses his concern for poor Latin American countries, many of which "owe more to the Inter-American Development Bank (IADB) than to other international institutions. However, the IADB debts of the countries concerned do not appear to be included in the agreement." He notes that the question of unsustainable and illegitimate debts owed to private commercial entities also should be addressed.
Furthermore, he requests that "debt relief should be de-linked from the adoption of economic liberalization policies." Loans and debt relief from international financial institutions are often only granted under conditions requiring the wholesale adoption of neoliberal economic policies including cuts in public spending, privatization of public utilities and services and the opening of domestic markets. The countries concerned have become more vulnerable to domestic and international economic volatility, Noko notes. He deplores the fact that "the new debt cancellation agreement is predicated on the HIPC process, which continues to require the adoption of such policies as a condition for debt relief."
Noko also strongly emphasizes the question of legitimacy, and criticizes the fact that "the new debt cancellation agreement is still founded on the calculation of how much a country can afford to pay, and does not consider the legitimacy of the debts." He demands the establishment of independent mechanisms for the prevention and just resolution of future debt crises. These mechanisms are needed for testing the legitimacy of debts before they are contracted, and for "mediating and resolving debt difficulties before they become humanitarian emergencies," he says. (649 words)
(By Julia Heyde, youth intern in the LWF Office for Communication Services.)
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