Jubilee 2000 Coalition
June 1999
Executive summary
The debts of the world's poorest countries are on the political agenda.
The worldwide Jubilee 2000 movement has focused attention on the
plight of people who bear the burden of debts that deprive them of
basic rights to health, education and clean water - debts that entrench
poverty and deepen injustice.
The existing Heavily Indebted Poor Countries (HIPC) Initiative has
been exposed as being totally inadequate, with countries paying only
slightly less than before on debt service. This failure has been
compounded by the worldwide economic slump and a drop in
commodity prices.
With mounting pressure on them to seriously address the problem, the
leaders of the Group of Eight (G8) leading industrialised countries
preparing for their June summit in Cologne competed with each other to
promise improvements to the HIPC Initiative. Sums of $50bn, $70bn
and more have been discussed. These are certainly large sums and far
exceed what has been suggested before. But creditors have talked
about writing off debt for more than twenty years. Are these latest
proposals going to deliver a genuine exit from debt for the poorest
countries? Will they help countries reach the internationally agreed
2015 development targets?
The Cologne offer
Based on intelligence gathered and new research undertaken in the
build-up to the Cologne summit, this report reveals for the first time
that
the improved HIPC initiative to be agreed at Cologne will mean an
average annual benefit of around $2.83 (£1.84) for each person in
fifty-two indebted countries - enough to buy perhaps five loaves of
bread, or one bag of rice, every year. These are small crumbs of
comfort.
The message is clear: Cologne will not release substantial new
resources for reducing poverty. The difference, if any, will be marginal.
By largely cancelling only the debt, which is not actually being serviced,
creditors ensure the deal is almost cost-free to them - and 'benefit-free'
to their debtors.
No exit from debt
What is likely to be agreed at Cologne will not deliver new resources
to the poor. The increased sums being talked about will still only write
off what is not being paid anyway. Equally, there will be no change to
the highly criticised means of assessing how much debt should be
written off. Debt "sustainability" remains almost entirely based on a
country's export earnings. We understand that the British government
has been defeated in its attempt to persuade other creditors to use a
formula for debt relief that would give debtor nations a genuine exit
from debt relief. The so-called 'fiscal criterion' is based on real
government budgets and looks at how much countries spend on debt
service compared to that spent on health and education. Using it would
produce different, bigger numbers on the amount of debt relief required
for countries to become 'sustainable'.
Cologne is unlikely to promise any extra debt cancellation in the
millennium year itself. At best, there will still be a minimum of three
years to qualify and a further three years of strict economic conditions
during which debt relief can be withdrawn. Unpayable debt has been
debated by the lenders for years; rather than end the crisis, the lenders
propose to continue the discussion while generations of children are still
unable to go to school. The leaders are steadfastly refusing to seize the
opportunity and deliver debt relief by the new millennium.
There have been no serious suggestions to change a procedure which
gives creditors total power. Using the debt relief carrot to impose the
structural adjustment policies of the IMF, which many believe increase
poverty, is unacceptable to both Jubilee 2000 campaigners and
governments of indebted countries. The intended purpose of debt relief
is to benefit the poor. If the IMF refuses to minimise costs and
maximise benefits to the poor, it should no longer be a gatekeeper for
debt relief.
The Jubilee 2000 alternative
During the past year, Jubilee 2000 campaigns around the world have
defined much more clearly the goals to be achieved. They stand in stark
contrast to the little that is on offer.
The Universal Declaration of Human Rights guarantees the right to
health and education. All donor countries have accepted the target of
halving the number of people living in absolute poverty by the year
2015. Jubilee 2000 argues that money must be spent on basic health
and education before debt service is paid, and that massive debt
cancellation will be needed to meet these targets. Thus governments
who continue to collect debt service from the very poor countries are
violating human rights and reneging on their own promises to end
poverty.
The Jubilee 2000 call is for debt cancellation in the year 2000. What
we are being offered is another decade of discussion about how we
might finally write off a little more of the debt that is not being
paid. It
promises to some day free a few people from debt slavery. It does not
make the year 2000 a Jubilee year - a year of a new beginning.
Jubilee 2000 campaigners in impoverished countries stress the need
to disconnect debt relief from strict IMF structural adjustment
conditions. The United Nations and even the World Bank itself
criticises these conditions. Campaigners accept the need for good
governance and fiscal probity, but they object to the IMF being
allowed to be prosecutor, judge and jury on their countries'
performance, on the grounds that its policies do not produce economic
growth or reduce poverty.
Jubilee 2000 campaigns in both rich and poor countries demand that
money released by debt cancellation be used for poverty reduction and
development, and they insist on conditions to ensure this. But they
argue that detailed conditions imposed from the north have failed and
will continue to do so. Instead, debt cancellation should be conditional
on transparency and locally developed poverty action plans to use
funds released. The Debt Review Body proposed by the Jubilee 2000
director, Ann Pettifor, introduces one way of setting up an independent
and transparent process involving civil society for debt relief
negotiations.
The challenge
Jubilee 2000 calls for:
cancellation by the year 2000
of the unpayable debt
owed by the world's poorest countries
under a fair and transparent process.
Despite the grand rhetoric and praise for Jubilee 2000 from the world's
leaders, their announcements do not meet these goals. Tiny reforms to
HIPC do not resolve the problem.
The G8 can yet confound its critics. It is still possible for the
leaders of
the most powerful nations to take a bold stand and cancel debt in the
year 2000. To do so would be to take a huge leap forward, for
progress and justice. But the time for small steps is long past. A billion
people in the world's poorest countries can live no longer on a few
crumbs of comfort. It is time to drop the debt.
More Information on the World Bank
More Information on the International Monetary Fund
More Information on Debt Relief
More Information on the G-7/8
More Information on Social and Economic Policy
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