NEWS RELEASE

Play Fair G8 ! Cancel the Debt of the Poorest Countries

June 9, 2004 – The Halifax Initiative Coalition, a coalition for economic democracy, called on Prime Minister Paul Martin and G8 leaders who are meeting today in Sea Island to cancel not only the debt of Iraq but of the poorest countries as well. 

“The justification to cancel Iraqi debt is no different than that of the highly indebted poor countries, particularly in Africa” said John Mihevc, Chair of Halifax Initiative, “Why should one country be given special treatment when all need debt cancellation in the interest of peace, security and human development?”

The US is proposing that creditor countries cancel the estimated US$ 120 billion in Iraqi debt while a proposal by British PM Tony Blair would see creditors “top up” a fund to reduce the debt of the poorest countries by about $1 billion. The Heavily Indebted Poor Countries initiative (HIPC), a fund created by industrialized governments in 1996 to ease the debt loads of poor countries is due to expire in December 2004.

HIPC has been soundly criticized as being ‘too little, too late, for too few’. Of the 41 countries eligible for the programme only 12 have completed it since its inception and received inadequate reductions in their debt. All participating countries are subject to strict conditions imposed by the World Bank and International Monetary Fund that undermine sovereignty and threaten social and economic development. No country has had all its debt written off. 

If the Iraqi debt were cancelled, the international community would be providing almost three times as much debt relief to one country as it has provided over the past seven years to 27 of the world's poorest countries combined.

“If Canada is committed to reducing the debt of the poorest countries, it will demand 100% debt cancellation without conditions,” said Michael Bassett, Halifax Initiative Coordinator. “ Topping up of HIPC simply will not do.”

“Blair’s $1 billion HIPC “top up” with strings attached for all the poorest countries should not be seen as any kind of achievement by the G8, ” said John Mihevc, Chair of Halifax Initiative. “Particularly when Canada alone can cancel $750 million in debt to Iraq and other industrialized countries can commit to tens of billions”.

For further information please contact:

Michael Bassett

Halifax Initiative Coordinator

Land line: 613-789-4447

Media Backgrounder

 Africa pays around US$15 billion in debt servicing every year to the World Bank, IMF and rich country governments. This is more than the continent receives in aid.

 Countries must pay debt obligations before providing for the most basic human rights to their citizens. Africa needs an additional US$ 10 billion to fight –––HIV/AIDS, yet paid US$ 4 billion more in debt service than it received in new loans in 2002

In 1996, the World Bank and IMF created a mechanism (HIPC) to “relieve” the debt burden of the poorest countries that has not delivered a solution to the debt crisis. In spite of receiving some debt cancellation through this mechanism, Zambia will pay more in debt service this year than it did prior to the programme.

The World Bank, IMF and rich country governments are granting Iraq an estimated $US 80-90 billion in debt relief. In a year, the international community has agreed to grant almost three times as much debt relief to one country as it has provided over the past seven years to 27 of the world's poorest countries combined.

According to the last progress report on the Heavily Indebted Poor Countries Initiative presented to the IMF and World Bank last September, the total amount of debt reduction granted to the 27 countries was $31.4 billion in net present value terms. Twenty-three of these countries are African and the other four are Latin American.