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Note: This document is from the archive of the Africa Policy E-Journal, published
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Africa: Drop the Debt
Africa: Drop the Debt
Date distributed (ymd): 010412
Document reposted by APIC
Africa Policy Electronic Distribution List: an information
service provided by AFRICA ACTION (incorporating the Africa
Policy Information Center, The Africa Fund, and the American
Committee on Africa). Find more information for action for
Africa at http://www.africapolicy.org
+++++++++++++++++++++Document Profile+++++++++++++++++++++
Region: Continent-Wide
Issue Areas: +economy/development+
SUMMARY CONTENTS:
This posting contains a press release and key findings of a new
research report from Drop the Debt, a UK-based coalition
campaigning for additional debt cancellation by the time of the
Genoa Summit of rich country leaders (G-7) in July.
The report expresses the consensus of the vast majority of nongovernmental
groups working on the issue, including Africa Action,
that creditors' debt relief efforts to date under the Heavily
Indebted Poor Countries (HIPC) initiative fall far short of what is
needed. Drop the Debt calls for immediate 100% cancellation of the
debts of the HIPC countries, as well as inclusion of other
countries such as Nigeria which are not now covered by HIPC.
Among the new points in the report:
- The 17 African countries that have benefited from HIPC will still
spend $1.4 billion repaying debts each year; UNAIDS estimates the
same countries require $1.5 billion to scale up their effort to
combat HIV/AIDS to an adequate level.
- Even after HIPC debt reductions, the 22 countries that have
qualified so far will still spend more on paying debts than they
currently spend on healthcare.
- Independent audits from two accounting firms show that the World
Bank and the IMF could afford to completely cancel the debts owed to
them by HIPC countries. After HIPC reductions for the
first 22 countries, their debts to the IMF and World Bank will
account for more than the next largest 17 creditors combined.
The Drop the Debt web site (
http://www.dropthedebt.org) provides
the e-mail addresses of the executive directors of the
International Monetary Fund representing the G-7 countries (see
below) and urges supporters of debt cancellation to write demanding
full cancellation of the remaining debt.
+++++++++++++++++end profile++++++++++++++++++++++++++++++
NEW ON AFRICA ACTION WEB SITE
From the Desk of Salih Booker (http://www.africapolicy.org/desk)
features a Foreign Policy in Focus Commentary by Africa Action
research associate Ann-Louise Colgan, on President Bush's nominee
for Assistant Secretary of State for Africa, Walter Kansteiner. The
nominee, she finds, fits the profile of the majority of Bush's
middle-tier appointments, described in the Washington Post (March 25,
2001) as having 'eclipsed Reagan's in conservatism.' Neither
Kansteiner's official biography nor news stories to date have
highlighted his relationship with the far-right Institute for
Religion and Democracy, which published his 1988 book on South
Africa attacking the African National Congress as 'unrepresentative.'
##############################################################
REALITY CHECK
Drop the Debt
PO Box 5555 London
SE1 OWG UK
Tel: +44(0)20 7922 1111; +44(0)7970 175324
E-mail: [email protected]
http://www.dropthedebt.org
News Release, 10 April 2001
For more information:
Jamie Drummond/Lucy Matthew +44 (0) 961 346 334
In Washington, DC: Jamie Shor +1 -202 293 1001
Drop the Debt news release
10 April, 2001
An independent firm of accountants unveiled a study today in
Washington that shows the International Monetary Fund and the World
Bank can afford to cancel 100 per cent of the debts they are owed
by the poorest countries.
London firm Chantrey Vellacott DFK's research is contained in a new
report by Drop the Debt, the short-term successor to Jubilee 2000
in the UK, which highlights how deeper debt cancellation is
affordable and urgently required to fight the spread of HIV/AIDS in
Africa. While G7 countries have pledged to wipe out the total debts
they are owed by many of these countries, the IMF and World Bank
have failed to do so.
The report "Reality Check: the need for deeper debt cancellation
and the fight against HIV/AIDS" contains the following new
findings:
- After the first 22 countries have been through the existing
Heavily Indebted Poor Countries (HIPC) debt initiative agreed in
1999, they will owe more to the IMF and World Bank than they do to
the next largest 17 creditors combined
- The IMF and the World Bank can afford 100 per cent cancellation
through a number of options, including use of reserves and net
income, without impacting adversely on their ability to carry out
their objectives
- The 17 African countries that have benefited from HIPC will still
spend $1.4 billion repaying debts each year; UNAIDS estimates the
same countries require $1.5 billion to scale up their effort to
combat HIV/AIDS to an adequate level
- Sub-Saharan Africa as a whole spends $13.3 billion repaying debts
each year; the Global AIDS Alliance estimates that Sub-Saharan
countries could need up to $15 billion each year to fight the
spread of HIV/AIDS
- The annual cost of canceling HIPC debt owed to the World Bank and
the IMF is $353 million and $368 million respectively - this is
equivalent to a dollar each year for every person in the G7
countries
Adrian Lovett, Director of Drop the Debt, said: "The AIDS crisis is
devastating Africa and the continent's biggest creditors, the IMF
and World Bank, are still taking the money. They should take a
reality check and act now to cancel the debt. From today, the old
excuse that they cannot afford to do so is comprehensively
demolished. "
Maurice Fitzpatrick, author of Chantrey Vellacott's audit found
that "the existing debts due to the World Bank and IMF could be
completely cancelled - without jeopardizing the ability of the
World Bank and the IMF to carry out their overall functions."
The report was launched at a Drop the Debt/Oxfam conference and
discussed by a panel including Adam Lerrick, Carnegie-Mellon
University, Adrian Lovett, Drop the Debt, JoMarie Griesgraber
Oxfam, Edith Ssampala, Ugandan Ambassador to the US,
representatives from the IMF and World Bank, and Maurice
Fitzpatrick, Chantrey Vellacott.
Notes for editors:
- "Reality Check: the need for deeper debt cancellation and the
fight against HIV/AIDS", including Chantrey Vellacott's audit of
the IMF and World Bank's finances is online at www.dropthedebt.org
from April 10
- Drop the Debt is a UK based organization campaigning for a New
Deal on Debt for the poorest countries by the time the world
leaders next meet in Genoa, Italy in July 2001. The United Nations
estimate that 19,000 children die a day in Africa because of the
debt crisis
- Global Development Finance 2001 was launched today by the World
Bank, with the latest figures on debt by country and projected
outlook for growth in developing countries.
10 April 2001
Reality Check:
the need for deeper debt cancellation and the fight
against HIV/AIDS
Key findings
The Heavily Indebted Poor Countries (HIPC) initiative fails to meet
the challenge of significant debt cancellation
- Average annual debt payments by the 22 countries which have begun
to receive some debt relief are being reduced by a mere 27 per cent
- or an aggregate $735 million per year
- This leaves these 22 countries still spending more repaying debts
than they currently spend on healthcare
- The G7 countries have all promised to write off virtually all the
debts owed by HIPCs; the IMF and World Bank will reduce debts owed
to them by less than half
- Zambia and Niger both face increased debt service payments after
qualifying for HIPC
The World Bank and IMF are the biggest remaining creditors to the
poorest countries and independent accountants have confirmed they
could write off 100 per cent of the debts of Heavily Indebted Poor
Countries without impeding their ability to function
- After HIPC debt reduction, the 22 countries will owe more to the
World Bank and IMF than to the next 17 biggest creditors put
together
- The cost of going beyond the HIPC initiative to provide 100 per
cent cancellation for these 22 countries will be $215 million per
year for the World Bank and $287 million for the IMF; to extend it
to all HIPCs would cost a further $138 million and $81 million
respectively
- Independent research by accountants Chantrey Vellacott DFK offers
proposals that would release more than $30 billion of resources to
fund deeper World Bank / IMF debt cancellation
- Chantrey Vellacott state that if their proposals were followed,
the World Bank and IMF could cancel 100 per cent of the debts owed
to them by HIPCs without jeopardizing the ability of the World Bank
and the IMF to carry out their overall functions
- The IMF can write off its debts to the HIPC countries, according
to Chantrey Vellacott, by using the earning capacity of general
reserves, together with a repeat of limited gold revaluation
- Chantrey Vellacott show that the World Bank can afford to cancel
100 per cent of HIPC debts owed to its two lending arms, IBRD and
IDA, through prudent use of IBRD reserves and future net income,
without impacting on the Bank's credit rating or its status as a
lender
- Beyond their specific recommendations, Chantrey Vellacott also
point out that the World Bank and IMF could afford to cancel even
more given sufficient political will from their shareholders
- A second independent opinion on the capacity of the World Bank
shows that deeper cancellation can be made possible through use of
future reflows to IDA, which are projected to grow rapidly to bring
in $2 billion more every year in 2016-20 than they do today
- If the G7 countries were to fund the write off of the World Bank
and IMF's debts from HIPCs, it would effectively cost each of their
citizens one dollar per year
Debt cancellation delivered so far is making a real difference to
the lives of ordinary people - but it is not enough
- Funds released by debt cancellation are helping the poor, for
example: doubling primary school enrolment in Uganda; vaccinating
half a million children against killer diseases in Mozambique;
providing three extra years of schooling in Honduras; and financing
half of Guyana's national development plan
- Two-thirds of resources released by debt cancellation so far are
being spent on health and education, with most of the remainder
being used for HIV/AIDS, water supply, roads and governance reforms
Deeper debt cancellation is more urgent than ever in order to help
fight HIV/AIDS and meet 2015 poverty reduction targets
- The 17 countries in Africa which have started receiving debt
relief are still spending $1.3 billion per year on debt repayments
- virtually identical to what UNAIDS estimates the same countries
need to begin scaling up the efforts to fight HIV/AIDS
- Sub-Saharan Africa spends approximately $13.5 billion per annum
repaying debts; the Global AIDS Alliance estimates that this region
needs $15 billion to combat HIV/AIDS each year
- Sub-Saharan Africa, the continent most affected by debt, is the
region faring worst against the 2015 targets to cut poverty by
half; between 1990 and 1998 the proportion of Africans in extreme
poverty increased, not decreased
New Deal on Debt is needed urgently in order to fight the HIV/AIDS
emergency, to work towards the 2015 targets and to make levels of
debt genuinely sustainable; A New Deal on Debt should include the
following elements:
- 100 per cent debt cancellation for the poorest countries from
wealthy creditors who have not yet committed to this, led by the
World Bank, IMF and members of the Paris Club
- a trust fund for countries in conflict or with unacceptable human
rights records so that their debt payments can be returned in the
future to be invested in development
- significant debt cancellation for poor countries facing huge debt
burdens which are not currently considered - in particular, Nigeria
- and eligibility for cancellation based on the resources need to
fight poverty
- increased efforts in debtor countries to fight poverty and
disease using the funds from deeper debt cancellation, and an end
to imposed conditions that hurt the poorest
- concrete steps to minimize the risk of a new debt crisis, through
an increased proportion of future financing for poorer countries in
the form of grants instead of loans; and the exploration of a new
process to control unsustainable lending and borrowing
E-mail addresses of executive directors of IMF
(from http://www.dropthedebt.org)
Karin Lissakers, US: [email protected]
Jean-Claude Milleron, France: [email protected]
Yukio Yoshimura, Japan: [email protected]
Bernd Esdar, Germany: [email protected]
Riccardo Faini, Italy: [email protected]
Thomas A. Bernes, Canada: [email protected]
Stephen Pickford, UK: [email protected]
This material is being reposted for wider distribution by
Africa Action (incorporating the Africa Policy Information
Center, The Africa Fund, and the American Committee on Africa).
Africa Action's information services provide accessible
information and analysis in order to promote U.S. and
international policies toward Africa that advance economic,
political and social justice and the full spectrum of human rights.
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