Dragging the debt chain
The June announcement from Canada by G8 leaders of an additional billion dollars for the failing Heavily Indebted Poor Country (HIPC) Trust Fund barely made a ripple in the sea of debt that impoverishes the South.
Certainly the HIPC Fund needs more funds. According to Christian Aid, poor countries in Africa are still repaying $15 billion every year for illegitimate debts. But if the number of people living in poverty is to be halved by 2015 (to meet the UN Millennium Goals), the G8 needs to re-examine its solutions.
To be eligible for relief under the HIPC process, debtor countries must first prepare a Poverty Reduction Strategy Paper and undergo economic restructuring. With International Monetary Fund (IMF) and World Bank guidance, governments typically cut budgets (including large-scale public sector lay-offs), make quick sales of state assets and undergo comprehensive trade deregulation.
Six years after the initial HIPC initiative was established, only six countries – Uganda, Mozambique, Bolivia, Tanzania, Burkina Faso and Mauritania – have completed the debt-relief process. Uganda has been able
to double its primary-school enrolment – but at the cost of increased interference in its economy. The country cannot accept more than 12 per cent of its gross domestic product in foreign aid.
Other countries have failed to maintain their eligibility for debt relief. When Jubilee USA met with IMF staff in May this year, they found that six countries – Gambia, Guyana, Guinea, Guinea-Bissau, Malawi and Nicaragua – had been suspended from the HIPC process, primarily for non-compliance with agreements they’d previously reached with the IMF. Examples of non-compliance include failing either to privatize or cut expenditure.
In Canada, the G8 leaders announced that they expect 37 countries that follow ‘sound economic policies and good governance’ to benefit from debt reduction. Their focus on economies once again forgets the people.
Keep abreast of debt relief developments at [http://www.jubileeusa.org]