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Africa: G-8 Debt Statement
Africa: G-8 Debt Statement
Date distributed (ymd): 980519
Document reposted by APIC
+++++++++++++++++++++Document Profile+++++++++++++++++++++
Region: Continent-Wide
Issue Areas: +economy/development+
Summary Contents:
This posting contains the statement by the Group of Eight (G-8) countries
meeting in Birmingham, United Kingdom, in response to the international
Jubilee 2000 demand for cancellation of unpayable debt by poor countries,
particularly in Africa. It also contains a commentary on the failure of
the G-8 to act more decisively, from the European Network on Debt and Development
(Eurodad). Additional background and links can be found at the APIC debt
action page (http://www.africapolicy.org/action/debt.htm).
+++++++++++++++++end profile++++++++++++++++++++++++++++++
Response by the Presidency on Behalf of the G8 To the Jubilee 2000
Petition
[This and other statements are available on the official site of the
Birmingham G-8 summit
(http://birmingham.g8summit.gov.uk).]
On behalf of the G8 Heads of State and Government gathered here in Birmingham,
I welcome the commitment so many of you have shown today to help the poorest
countries in the world. Your presence here is a truly impressive testimony
to the solidarity of people in our own countries with those in the world's
poorest and most indebted. It is also a public acknowledgement of the crucial
importance of the question of debt.
I can assure you that all leaders here fully share your concern over
the debt burden faced by many poor countries. More than that, we are all
committed to helping heavily indebted poor countries free themselves from
the burden of their unsustainable debts. This is why over the years we
have, where possible, cancelled bilateral aid debt and in the context of
the Paris Club rescheduled or cancelled substantial proportions of other
bilateral debt. Aware that this still was not enough, we initiated in Lyon
two years ago, the Heavily Indebted Poor Countries Initiative designed
to ensure a sustainable exit from their debt burden for all the most affected
countries. Over the last three years, official creditors in the Paris Club
have forgiven in favour of the poorest countries US$ 8 billion with more
than US$ 5 billion of that relief going to Africa.
Since then we have focused our attention on implementing the Initiative
successfully. This requires a partnership between creditors and debtors
and effort on both sides. Debt relief in itself is no magic solution; it
can only be part of the answer to achieving sustainable development. Where
a country shows a real will to pursue policies that will relieve poverty
and build a sound economy, we will do our part and contribute the funds
necessary to reduce their debt burden to a sustainable level. This will
ensure that the resources freed up are put to good, productive use, generating
growth and bringing real benefits -- in the form of better education, better
health, and sound, honest government -- to the poorest people. We will
continue to support such efforts through our development assistance programmes,
through which G8 countries currently deliver some US$10 billion a year
to heavily indebted poor countries.
So far six countries have qualified for debt relief from the HIPC initiative
totalling around US$ 5.7 billion. Among those six countries, Uganda has
been the first to complete the process, recently receiving additional debt
relief of nearly US$ 650 million. In addition to these countries, two more
countries have already benefited from preliminary positive indications
regarding their possible eligibility under the HIPC Initiative.
Our ambition, reaffirmed by all G8 leaders today, is to ensure the speedy
and determined implementation of the initiative and encourage all eligible
countries to take the policy measures needed to embark on the process as
soon as possible, so that all can be in the process by the year 2000. We
will work with the others concerned to ensure that all eligible countries
get the relief they need to secure a lasting exit from their debt problems.
We are keenly aware of the importance of making progress. For the sake
of our citizens in our own and all other countries, we must not fail.
Commentary by
European Network on Debt and Development (Eurodad) Rue Dejoncker 46
B-1060 Brussels, Belgium
Tel: 32-2-543-9060
Fax: 32-3-544-0559
E-mail: [email protected]
Web: http://www.oneworld.org/eurodad
Germans block debt relief at Birmingham G8 Summit (15-17 May 1998)
Arguments do not hold
Fifty to seventy thousand people from all parts of Britain and all continents
encircled the centre of Birmingham on Saturday 16 May. They called upon
the the leaders of the Group of 8 richest economies convening for their
annual summit to do more on debt relief for the world's poorest and most
heavily indebted countries. In this otherwise auspicious setting, it was
once again Germany which blocked substantial progress on debt relief, with
the US and Japan following suit.
Chancellor Helmut Kohl said in reply to the criticisms that Germany
was contributing "very constructively" to debt relief for the
poorest countries. Germany had already cancelled D-Mark 12 billion in outstanding
claims on developing countries, which placed it second after France among
the G8 in terms of bilateral debt relief. Kohl furthermore emphasised that
debt relief in itself was not enough but needed to be combined with structural
reforms as the basis for sound economic development.
Kohl made it clear that Germany also had other commitments: "there
is also something like European solidarity". He said Germany was more
active than any other country on the development of Eastern Europe, in
which it had invested D-Mark 160 billion since 1990. The German chancellor
advocated "a fair sharing of the burden". He stressed that over
the past years Germany had received 340 000 refugees from the former Yugoslavia.
Germany moreover did not have a colonial heritage, and the world was more
than only Africa: "Germany has done its share", he said to all
those who criticised Germany for its minimalist efforts in respect to "the
forgotten continent".
Faced with such a vociferous and eloquent defense, it is important not
to forget certain facts, obviously not mentioned, in respect to the German
position on debt.
First, Germany, it is true, has cancelled or rescheduled D-Mark 12 billion
worth of debts (D-Mark 9 billion in concessional, aid-related claims, the
remainder non-concessional claims). Germany likes to compare itself to
other G8 governments, amongst which it indeed comes second after France
on this issue. But compared to smaller nations, like the Netherlands, Sweden,
Norway, Denmark and Switzerland, Germany has done proportionally much less
on debt relief. Moreover, the figure of D-Mark 12 billion is the total
German debt relief since 1978 (when UNCTAD passed a resolution calling
on Western governments to cancel all aid-related debts), thus over a period
of twenty years. Compare this to the rescue packages of tens of billions
of dollars for Mexico in 1995 or more recently for Thailand, Korea and
Indonesia, which the West puts together witihn a few days. Furthermore,
while Germany scores higher on its volume of foreign aid than some of the
G8 such as England, the US or Italy, it lags far behind most of the other
European countries, in particular those mentioned above.
Secondly, last month Germany was the only one of Mozambique's creditors
that refused to contribute to special efforts to grant the extremely impoverished
country the debt relief that was calculated necessary in order for the
debt burden not to impinge on its future economic and social development.
In 1996, all creditors, including bilateral governments such as Germany
and multilateral institutions such as the IMF and World Bank, committed
themselves to granting the poorest, most indebted developing countries
the debt reduction required to reach a sustainable level of debt as defined
by the World Bank and IMF. A sustainable level of debt means a level of
debt which the country can afford to service in relation to its economy,
in particular its export income. Debt relief according to the 1996 agreement,
which became known as the Heavily Indebted Poor Countries (HIPC) Debt Initiative,
is carried out on a case by case basis, after debtor countries have shown
good policies on economic and social reform. Mozambique already fulfilled
the requirements last year, but creditors such as Germany delayed frist
the negotiations and then their contributions. It took almost another year
before others stepped in to pay a part of the German obligations. Thus,
Germany itself failed on "fair burden sharing". On a related
note, Germany still is the major shareholder in the IMF that refuses to
let the IMF sell part of its gold reserves, which would generate proceeds
to help finance debt relief the IMF has to grant.
Thirdly, Germany should be the last country blocking debt relief for
the poorest countries, because it received the most generous debt relief
treatment ever after the Second World War. Now in Birmingham it even refused
to help a small group of countries that have just come out of armed conflict
(e.g. Rwanda), and are therefore not in a position to show a track record
of good economic policies. The London Agreement of 1953 determined that
Germany only had to spend 5% of its annual export income on paying back
its debts to the allied countries that defeated Hitler Germany. Germany
now demands that a devastated and desperate country such as Mozambique
spend four times that, namely 20% of its export earnings, on paying back
its debts.
The originally grounbreaking HIPC debt initiative will fail unless it
becomes more far-reaching. Reforms, economic growth and human development
are only possible if accompanied by sufficient debt relief. Germany's Wirtschaftswunder
after the war is the best proof of this.
EURODAD/Ted van Hees
18 May 1998
This material is being reposted for wider distribution by the Africa
Policy Information Center (APIC), the educational affiliate of the Washington
Office on Africa. APIC's primary objective is to widen the policy debate
in the United States around African issues and the U.S. role in Africa,
by concentrating on providing accessible policy-relevant information and
analysis usable by a wide range of groups individuals.
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