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Africa: Debt Update
AfricaFocus Bulletin
Jun 13, 2004 (040613)
(Reposted from sources cited below)
Editor's Note
Despite pre-summit news reports that rich country leaders gathered
for the G8 summit might consider a British proposal for full
cancellation of debt for poor countries, the summit only announced
a two-year extension of the Heavily Indebted Poor Countries (HIPC)
initiative. The Jubilee2000 USA Network and other groups reportedly
flooded the U.S. Treasury Department with phone calls, and some
officials were said to be considering the idea. But the White House
was not convinced.
This issue of AfricaFocus Bulletin contains a call from Stephen
Lewis, UN Special Envoy for HIV/AIDS in Africa, for the G8 to
ensure that at least their HIPC pledge be put into effect for
Zambia at an International Monetary Fund meeting on the country's
debt scheduled for June 14. It also contains a statement from the
Jubilee2000 USA and 50 Years is Enough networks on the outcome of
the summit, and links to other related background information.
Among the six African countries whose presidents met with the G8
leaders last week, Ghana, Senegal, and Uganda have received limited
debt relief under the HIPC plan (see
http://www.jubileeresearch.org/latest/realhipc250903.htm). Algeria,
South Africa, and Nigeria are not included in the plan, but Nigeria
in particular is in urgent need of debt relief. A total of US$ 1.4
billion, more than Nigeria's combined budget for health and
education, has been set aside for debt servicing in 2004. Less
than two weeks ago, in a speech in Abuja, Nigerian President
Olusegun Obasanjo jokingly offered to resign if that is what it
would take to get debt relief for his country. But there is no
indication that the Nigerian president won the ear of the G8
leaders with his arguments.
As noted in a report from the UN's Integrated Regional Information
Network (IRIN), the Nigerian president cited the recent
cancellation of much of Pakistan's debt and forthcoming
cancellation of much of Iraq's debt, and noted bitterly that "Debt
relief, debt cancellation is a political, not economic issue."
Obasanjo said Nigeria's original debt stock of about US $10
billion had been paid "twice over" if one included the "penalty
for not paying and...penalty for the penalty" "This is ridiculous,"
he said. "The debt that is being held against us [Nigeria]
is unpayable and unsustainable if we really want to have an
equitable world." (For full text of the IRIN article see
http://www.irinnews.org or
http://allafrica.com/stories/200406010031.html)
++++++++++++++++++++++end editor's note+++++++++++++++++++++++
Statement by Stephen Lewis,
UN Special Envoy for HIV/AIDS in Africa:
Zambia Test Case for G8 Summit
Friday, June 11, 2004
"At the Heart of Everything Lies HIV/AIDS"
The G8 Summit finished yesterday. It finished with a flourish about
the HIPC (Highly Indebted Poor Countries) Initiative on debt
reduction. The decision was to more fully implement HIPC, and to
extend it for another two years. There was much self-congratulation
amongst G8 members.
As it happens, the decision can now be put to an immediate test; a
test of integrity, a test of the ringing G8 rhetoric. This very
Monday, June 14, 2004, the IMF Board is meeting to consider the
case of Zambia. Zambia is in desperate straits, and it all revolves
around the IMF and HIPC.
I shall try to put the situation as simply as possible. But
remember: everything has to be measured against the backdrop of a
country where HIV/AIDS has taken, and continues to take a terrible
toll.
In April of this year, the Government of Zambia negotiated its
2004-2007 Poverty Reduction and Growth Facility (PRGF) with the
IMF. This was meant to be the programme to run the country
financially for three years. But it had a particular premise on
which everything was based: if Zambia could meet the conditions
imposed by the IMF, then Zambia would achieve the requirements for
HIPC eligibility by December 31st, 2004, thus reducing foreign debt
service substantially, and freeing up significant resources for the
new budget. Essentially, Zambia had to produce good economic
performance for six months and the IMF would verify that the "HIPC
completion point" had been reached. The entire programme (PRGF)
depends on meeting the HIPC targets.
It is impossible to overstate how hard Zambia has been trying to
comply with IMF requirements, including the imposition of a
suffocating cap on wages. The Government truly thought it was
meeting those six-month conditions by the agreed deadline, when the
IMF suddenly informed Zambia that it wouldn't be possible to
resolve things by the end of 2004; the evaluation of Zambia's
performance would have to extend into the first quarter of 2005.
For the Government, that would be a disaster. The entire country is
wholly fixated on 2004; for the sake of a month (or two) a kingdom
is lost.
As a result, something unprecedented has happened. The Minister of
Finance and National Planning, The Honourable Ng'andu P. Magande,
has issued a two page document outlining the issues, acknowledging
the overwhelming crisis which the Government faces, and appealing
to the diplomatic and multilateral communities to intervene with
the IMF to get it to behave in a different manner on Monday.
The economy of Zambia is in crisis. The Government has frozen wages
in the public sector, and raised taxes. Incomes are so low that
people are barely surviving. The imposed macroeconomic policy means
that the Ministry of Health can hire no more staff, and fully
twenty per cent of the municipal districts have no doctors and no
nurses. It is estimated that there is a shortfall of 10,000
teachers, and there are 9,000 newly-trained teachers who cannot be
hired. Average pupil- teacher ration is approaching 56:1 . fatally
wounding the quality of education. The damage to the social sectors
is staggering.
Why do I choose to issue this statement? Because at the heart of
everything lies HIV/AIDS. The pandemic is methodically and
destructively eating away at the capacity and infrastructure of
Zambian society. It cannot be allowed to continue. The Government
urgently wants to confront the pandemic, but it cannot do so with
its financial policy and planning in a straitjacket. The Board of
the IMF must come to realize that rigid macroeconomic
conditionality is putting Zambia at risk. Observers within the
country worry about the potential for social unrest. Even the
Minister of Finance signals the Government's acute anxiety when he
says: ". the Government of the Republic of Zambia has asked the
people of Zambia to see the year 2004 as a period of sacrifice so
as to reach the HIP completion point by December 2004. Thus,
Government has taken difficult and unpopular decisions . If the
prospect of Zambia .attaining the HIPC completion point is made
impossible at next Monday's IMF Board meeting, then the credibility
of, and public support for, the Government's programme with the IMF
. will be severely eroded".
I have argued before in cases involving the International Monetary
Fund, and I argue again that it has failed to grasp the demonic
force of the human and economic carnage caused by HIV and AIDS. The
poorest sectors of society: the extended families, the women, the
children, the orphans . they have all made incredible sacrifices to
keep life going in Zambia in the face of wrenching austerity. I
appeal to the IMF Board to introduce the tiny quotient of
flexibility being requested by the government of Zambia. To do
otherwise is to give continued momentum to the pandemic.
There's a bitter irony here. The former Government of Zambia was a
Government that often flouted every injunction of the international
community. The present Government, and the people of Zambia, are
falling over backwards, in the face of incomparable odds, to comply
with the demands of the international community. I have visited
Zambia four times in the last eighteen months; I've met with many
segments of society in various parts of the country, with my
colleagues in the UN family, and with the President and members of
his cabinet. This is a Government doing everything in its power to
restore economic growth and social equity.
For heaven's sake, give Zambia some breathing room. Was the G8
serious in its avowed embrace of HIPC? We'll know on Monday.
Jubilee USA Network * 50 Years is Enough Network
FOR IMMEDIATE RELEASE - June 10, 2004,
CONTACT: Marie Clarke, Jubilee USA, c: 202-255-7849 / Neil Watkins,
c: 202-421-1023 Njoki Njehu, 50 Years Is Enough Network, c:
202-746-4318 Online Press Room -- http://www.jubileeusa.org
US Movement for Debt Cancellation Outraged by G-8 Failure on Debt
Failure to Act on 100% Debt Cancellation a Tragedy, Will Cost Lives
SAVANNAH, Ga. - Jubilee USA Network and the 50 Years Is Enough
Network expressed disappointment this afternoon at the failure of
the G-8 leaders to take decisive action by committing to support
100% multilateral debt cancellation for impoverished nations.
Over the past several days press reports had indicated that UK
Prime Minister Tony Blair had put forth a proposal for 100% debt
cancellation for poor countries. This afternoon, however, the
leaders of the Group of Eight wealthy nations instead announced a
meager 2-year extension of the Heavily Indebted Poor Countries
(HIPC) Initiative instead of a definitive commitment to full
cancellation.
"At this critical moment, when every minute another African child
dies of AIDS, the global community needs 100% cancellation of
multilateral debt without harmful conditions," said Marie Clarke,
National Coordinator of the Jubilee USA Network. "By failing to
seize the opportunity, the G-8 has once again chosen baby steps
over bold action."
HIPC, even by IMF and World Bank standards, has failed to provide
an exit from the debt crisis. After eight years of the HIPC
program, two things are clear: when countries have more access to
their own resources they use them well, but HIPC has been too
little relief, too slow, for too few countries and with too many
conditions.
"Indebted countries need 100% debt cancellation without deadly
conditions on the occasion of the IMF and World Bank�s 60th
Anniversary year," said Njoki Njehu, Director of the 50 Years is
Enough Network. "Cancellation of impoverished country debt by the
IMF and World Bank must be financed through their own resources."
Bi-partisan legislation calling for the IMF to cancel 100% of the
debts of 50 nations without harmful conditions has been introduced
in the U.S. House of Representatives. The JUBILEE Act, HR 4511,
will legislate what the G-8 has failed to propose.
Jubilee USA Network, the 50 Years Is Enough Network, and the
broader debt cancellation movement will turn up the heat on global
leaders and the multilateral creditors in the coming months.
"President Bush and the G-8 might have found it hot in Georgia in
June, but we will turn up the heat even more in this election year
on the issue of debt cancellation. We will be bringing our calls
for 100% cancellation to pulpits throughout the country, to the
halls of Congress with the JUBILEE Act, and to the streets," said
Clarke.
Earlier this week, Jubilee USA Network released a letter signed by
more than 250 religious leaders, including Jesse Jackson and
leaders of Protestant, Catholic, and Jewish denominations calling
for 100% cancellation of the debts of impoverished nations without
harmful conditions in light of the AIDS crisis.
Groundbreaking Debt Legislation Introduced in U.S. Congress
Jubilee USA Network Applauds the Introduction of the JUBILEE Act
and calls on G8 to Pressure IMF to Cancel 100%
Jubilee USA Network http://www.jubileeusa.org
June 3, 2004 : Marie Clarke, 202-783-0215 / c: 202-255-7849
Neil Watkins, 202-783-0129 / c: 202-421-1023
WASHINGTON - Representatives Waters (D-CA), Leach (R-IA), Frank
(D-MA), Bachus (R-AL) and Lee (D-CA) introduced the JUBILEE Act
today into the House of Representatives. The JUBILEE Act is
groundbreaking legislation that would require the U.S. Treasury to
work in appropriate multilateral settings to achieve 100 percent
cancellation of the debts of 50 nations by the International
Monetary Fund. The IMF would be required to finance the
cancellation from their own resources without harmful
conditionality.
"The JUBILEE Act will help build a better, safer world by providing
impoverished nations the fresh start necessary for development,"
said Marie Clarke, National Coordinator of Jubilee USA Network.
"The cancellation of debts owed to the IMF would remove a major
impediment to poverty eradication and economic growth in Asia,
Africa and Latin America and enable the nations to invest their own
resources in health care, education, and poverty reduction."
"Jubilee USA Network applauds the prophetic action of these five
Congress people who have demonstrated their political, spiritual
and moral courage to call for the IMF to do their fair share of
debt cancellation," Clarke said. "We face the greatest health
crises in our times, a crisis that threatens the very survival of
the global community. Without full debt cancellation, AIDS will
continue to be a death sentence for the developing world."
The introduction of the JUBILEE Act is timed to coincide with the
G-8 summit next week in Sea Island, Ga. The G-8 are likely to
address the issue of the debt crisis faced by impoverished nations.
UK Prime Minister Tony Blair and Chancellor of the Exchequer Gordon
Brown are proposing an extension of the World Bank and IMF's debt
relief scheme, the Heavily Indebted Poor Countries' Initiative and
the extension of debt relief to countries that have not yet
benefited from the program.
Jubilee USA Network argues that rather than taking small steps with
this failed program, we must follow the lead of sponsors of the
JUBILEE Act and commit to a lasting solution to the debt crisis and
leverage 100 percent cancellation of the external debt of the most
impoverished nations by the International Monetary Fund, the World
Bank as well as all other significant bi-lateral creditors.
"Jubilee USA calls on the G-8 to adopt the call for 100 percent
cancellation by the IMF of the fifty eligible countries as a part
of their strategy to resolve the debt crisis," stated Clarke.
The IMF will respond to the call for 100 percent cancellation by
pleading poverty. But reports by British accounting firms, and just
last fall by Jubilee Research in the UK, have shown that the World
Bank and IMF have enough resources to cancel 100 percent of the
Heavily Indebted Poor Country debts without any impact on their
credit rating or ability to lend, and could probably expand to
cover cancellation for many countries outside the HIPC Initiative.
Additional Links on G8 Meeting
The White House, June 10, 2004
Press Conference of President Bush after the G8 Summit
http://www.g8usa.gov/sp_061004f.htm
Joint Press Conference By Abdelaziz Bouteflika, President of
Algeria, John Agyekum Kufor, President of Ghana, Olusegun Obasanjo,
President of Nigeria, Abdoulaye Wade, President of Senegal, Thabo
Mvuyelwa Mbeki, President of South Africa,
And Yoweri Kaguta Museveni, President of Uganda
http://www.g8usa.gov/sp_061004c.htm
G8 Information Centre
University of Toronto
http://www.g7.utoronto.ca
InterPress Service, June 10, 2004
G8 offers Meagre Debt and Aids Plan
http://allafrica.com/stories/200406110023.html
Africa Action, June 10, 2004
AIDS and Debt Relief Plans 'Inadequate and Off-Target"
http://allafrica.com/stories/200406100859.html
Previous Issues of AfricaFocus Bulletin on African Debt
Jun 3, 2004 Zambia: Condemned to Debt
http://www.africafocus.org/docs04/zam0406.php
"The evidence suggests that the past twenty years of IMF and World
Bank intervention have exacerbated rather than ameliorated Zambia's
debt crisis. Ironically, in return for debt relief, Zambia is
required to do more of the same. The country has been condemned to
debt." - World Development Movement report
Feb 13, 2004 Ethiopia: Debt Relief Backstep
http://www.africafocus.org/docs04/eth0402.php
Ethiopia's debt is becoming more and more unsustainable, even under
the narrow criteria used by international agencies to calculate
what countries can afford to pay. Changes in interest rates and
continued low coffee prices are projected to drive the value of the
debt up to 220 percent of Ethiopia's exports, even after promised
relief.
Feb 8, 2004 Africa: Who Owes Whom?
http://www.africafocus.org/docs04/debt0402.php
Rich-country finance ministers meeting in Florida this weekend
focused on the sinking dollar and rising U.S. debt, cautioning
against excessive volatility in currency markets. They also called
for more reductions in the debt burdens of Iraq and Afghanistan,
and warned debt-strapped Argentina to comply with International
Monetary Fund policies. Africa's debt, estimated at more than $300
billion, was not on the agenda.
Nov 25, 2003 Africa: Debt Meeting Consensus
http://www.africafocus.org/docs03/debt0311.php
African experts meeting in Dakar under the auspices of the United
Nations Economic Commission for Africa (UNECA) deplored the lack of
a consolidated African position in response to global policy
proposals that have vast economic implications for Africa. They
agreed that current debt relief schemes are inadequate, that
increased debt relief is the most effective way to provide rapid
additional funding for development, and that additional measures
were also essential to advance the globally acknowledged goals of
ending proverty.
Nov 4, 2003 Senegal: Debt and Destruction
http://www.africafocus.org/docs03/sen0311.php
As the U.S. Congress approves $87 billion for the U.S. occupation
of Iraq, long-standing promises by rich creditors to provide debt
"relief" of some $49 billion for 42 countries remain unfulfilled,
and largely off the radar screen for policymakers. Yet debt remains
a crippling burden not only for the 34 African countries that
qualify as Heavily Indebted Poor Countries (HIPC), but also for
major African powers such as Nigeria and South Africa.
Nov 4, 2003 Africa: Debt and Deception
http://www.africafocus.org/docs03/hipc0311.php
As the U.S. Congress approves $87 billion for the U.S. occupation
of Iraq, long-standing promises by rich creditors to provide debt
"relief" of some $49 billion for 42 countries remain unfulfilled,
and largely off the radar screen for policymakers. Yet debt remains
a crippling burden not only for the 34 African countries that
qualify as Heavily Indebted Poor Countries (HIPC), but also for
major African powers such as Nigeria and South Africa.
AfricaFocus Bulletin is an independent electronic publication
providing reposted commentary and analysis on African issues, with
a particular focus on U.S. and international policies. AfricaFocus
Bulletin is edited by William Minter.
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