Letter to PM calling on Lasting Legacy of Debt Cancellation - December 22, 2002

Rt. Hon. Jean Chrétien
Prime Minister of Canada
Office of the Prime Minister
80 Wellington Street
Ottawa, ON
K1A 0A2

December 22, 2002

Dear Mr. Prime Minister,

As the year 2002 draws to a close, it provides an opportunity for us, as Canadians, to reflect on the extent to which we have been successful in contributing to the creation of a better world in the emerging new millennium. The challenges are immense. The utter impoverishment of Africa, amid the current context of hunger and disease for millions of its people, has rightly been targeted for action by your government.

As Canadians we welcome the commitment of our national government, under your leadership, to support efforts for positive social change in Africa. As people who work for international development, the protection of human rights and the protection of the environment, we share with you the desire to see African people enjoy more fully the bounty of our earth, let alone basic health care, education, recognition of basic human rights, and self-determination in government. Within Africa, and in the world at large, we are seeing an increased desire for countries' ownership of their destiny. The nations of Africa are moving out of the shadow of colonial powers, wanting to shape their own history.

Yet, dragging down the energies of a new Africa, the weight of unpayable debt still hangs. No longer meaningful in terms of productive economic or social benefit, the debt of these countries continues to drain funds that are needed elsewhere.

Canada has taken a lead in cancelling the debt of heavily indebted poor countries, recognizing that debt relief is a first step in economic recovery. It is our privilege to be part of a nation that no longer collects payments from the most vulnerable in our global community. Our concern now is with the World Bank, the single biggest creditor for impoverished countries. Over US$700 million in payments from these countries to the Bank fall due every year, of which more than US$200 million are interest.

The World Bank has the capacity to expand its debt relief program to provide the full cancellation that Canada and other G7 countries have committed. The bank makes a profit of about US$1.5 billion every year. On top of this, hundreds of millions of dollars are set aside each year in loan loss provisions that are yet to be used.

The debt relief program administered by the World Bank and IMF is bogged down in delays and inadequacy. Programs are delayed by IMF demands for cuts to spending and market reform packages, regardless of commitments to poverty reduction and social spending. By demanding budget cuts before allowing debt relief, the IMF is denying these countries the fiscal room they need to develop their own programs for development.
Countries forced through tortuous conditions of economic restructuring that have little to do with social conditions, let alone economic realities, find that the debt relief at the end is not at all sufficient to provide any spark to their economies. Most countries do not get this far. Since the launch of the HIPC Debt Initiative in 1996, only six countries have graduated, only to find themselves still as indentured as their neighbours, denied the new start that was promised.

Mr. Prime Minister, we have failed to allow impoverished countries a new beginning with the beginning of the new millennium. We have to try again. And so we ask you to press further, and build on your legacy of support for Africa. We ask you to push for full cancellation of the debts of these countries to multilateral institutions like the World Bank.

Finally, Mr. Prime Minister, we wish you and yours all the best in the coming holiday season and new year.

John Mihevc
Chair, Halifax Initiative
On behalf of Halifax Initiative member groups:

153 Chapel St., Suite 104, Ottawa, ON, CANADA, K1N 1H5, phone (613) 789-4447
website: www.halifaxinitiative.org