G8 Debt Cancellation a Major Step - But G8 Leaders Still Have a Lot of Unfinished Business
June 15, 2005 - The Make Poverty History campaign applauds the weekend announcements by G8 Finance Ministers on a debt cancellation package as a key step forward for many of the world's poorest countries.
This decision marks acceptance, by rich countries, of outright debt cancellation as a strategy for management of the debt stock held by the world's multilateral institutions like the World Bank and the International Monetary Fund (IMF). The proposed deal will cover 18 countries initially and could eventually free up $US 40 to 50 billion in resources for qualifying poor countries.
"Canada helped to achieve the agreement by substantially altering its prior negotiating positions to accept the extension of debt relief strategies to the point of debt cancellation," says Gerry Barr, co-chair of the Make Poverty History campaign. "In particular, we welcome the inclusion of IMF debts as part of the package. In the lead-up to this meeting these debts seemed to have fallen off the table."
While the debt deal is viewed as a significant step forward, it contains some severe limitations in terms of the list of countries covered as well as the conditions attached before countries might qualify.
"Our analysis is that more than 60 countries need immediate debt cancellation to have any hope of achieving the MDGs," said Barr. "This deal only covers about a third of the countries who need full debt cancellation now."
Groups that have been active on the debt cancellation debate caution that the package reinforces the hold of the World Bank and IMF over poor countries seeking to qualify for debt cancellation. Typically the World Bank and the IMF impose strict spending controls, high interest rate policies and the forced privatization of key industries on countries seeking to qualify for debt relief.
"The conditions that the World Bank and IMF impose as criteria to qualify for debt cancellation have done far more harm than good in Zambia and have led to increases in poverty and less access to services," notes Emily Sikazwe, Executive Director of Women for Change in Zambia. "Countries like Zambia need to be able to implement their own national development strategies, rather than those imposed by Washington."
The debt cancellation deal is a good first step as it will provide about US$2 billion per year but Make Poverty History notes that the UN estimates that US$50 billion per year in new resources will be needed to achieve the Millennium Development Goals. The campaign has been calling for Canada to set a timeline to meet the internationally recognized target of 0.7% of national income for development assistance to do its part towards securing these needed resources.
The Make Poverty History campaign appreciates the role that Minister Goodale played in promoting debt cancellation through his work at the G7, and particularly through his involvement in the Commission for Africa. The Commission for Africa report recognized that more countries than the 18 currently covered need immediate debt cancellation to achieve the Millennium Development Goals and recognized the importance of poor country governments being able to design and implement their own national poverty alleviation strategies and for their people to hold them to account. Minister Goodale affirmed this approach in a June 10 speech to Chatham House where he said, "if Africa is to become a success story, it must be able to take the lead on its own development."
"The deal announced this weekend marks an important step forward and we hope that Canada will continue to provide leadership to ensure that the deal is strengthened and that all poor countries are able to get off the debt treadmill once and for all," said John Mihevc, of KAIROS: Canadian Ecumenical Justice Initiatives and Chair of the Halifax Initiative Coalition.
The Make Poverty History campaign calls on the G8 leaders to complete the unfinished business at their upcoming meetings in three key areas: 1) extend the eligible countries to include all those countries who need debt cancellation to achieve the Millennium Development Goals; 2) Remove the conditions attached to debt cancellation and 3) Commit to an additional US$50 billion of high quality aid, reach the 0.7% target by 2010, and ensure that aid is focused on the poorest countries.
For more information contact:
Canadian Council for International Co-operation
(Make Poverty History)
(613) 241-7007 ext. 311