Tuesday, June 14, 2005

G8 Debt relief

The US and Britain have agreed on a deal for African debt relief ahead of the upcoming meetings of the G8 nations. Writing for allafrica.com, Reed Kramer outlines the proposal:

The agreement on 100% debt relief for developing countries announced by finance ministers from the eight largest industrial nations on Saturday initially benefits 14 nations in Africa. Another nine African countries could qualify for full debt cancellation in the next 12 to 18 months, and the ministers pledged "to provide a fair and sustainable solution to Nigeria's debt problems in 2005" through the informal grouping of creditor nations known as the Paris Club.

The nations first in line for debt forgiveness are 18 (including four in Latin America) that have reached the "completion point" in the Highly Indebted Poor Countries (HIPC) initiative launched by the World Bank and International Monetary Fund in 1996. The 14 in Africa include Benin, Burkina Faso, Ethiopia, Ghana, Madagascar, Mali, Mauritania, Mozambique, Niger, Rwanda, Senegal, Tanzania, Uganda and Zambia. Nine others that are considered close to completion are Cameroon, Chad, Democratic Republic of Congo, Gambia, Guinea, Guinea-Bissau, Malawi, Sao Tome and Sierra Leone.

Britain put the price tag for writing off the debts of the 18 eligible countries at $40 billion, plus an additional $11 billion for the soon-to-be eligible nine. Aid groups and debt relief proponents say 62 countries need total debt forgiveness if they are to meet the Millennium Development Goals that were adopted by the United Nations in 2000 and include cutting poverty and disease in half by 2015. The ministers said that the World Bank and African Development Bank would be compensated 'dollar for dollar' for the debt cancellation, while the cost of debt relief for the International Monetary Fund "should be met by the use of existing IMF resources" or, by "extra resources" where necessary.
This sounds good on the surface, but apparently the deal comes with significant strings, including conditionals that may be more lucrative for the finance ministers of the west than the debt they've written off, as Sanjay Suri and George Monbiot point out.

And while the G8 nations pat themselves on the back, the biggest problem for Africa stares us in the face, says Naomi Klein: it is the neoliberal creed that mandates that the riches of the continent remain, overwhelmingly, out of the control of Africans.

In other words, the scale of this debt relief is a step in the right direction, but we're still a far way off from what needs to be done.