UNIVERSITY OF PENNSYLVANIA - AFRICAN STUDIES CENTER
Africa: Drop the Debt Date distributed (ymd): 010412 Document reposted by APIC
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Region: Continent-Wide Issue Areas: +economy/development+
This posting contains a press release and key findings of a new research report from Drop the Debt, a UK-based coalition campaigning for additional debt cancellation by the time of the Genoa Summit of rich country leaders (G-7) in July.
The report expresses the consensus of the vast majority of non- governmental groups working on the issue, including Africa Action, that creditors' debt relief efforts to date under the Heavily Indebted Poor Countries (HIPC) initiative fall far short of what is needed. Drop the Debt calls for immediate 100% cancellation of the debts of the HIPC countries, as well as inclusion of other countries such as Nigeria which are not now covered by HIPC.
Among the new points in the report:
* The 17 African countries that have benefited from HIPC will still spend $1.4 billion repaying debts each year; UNAIDS estimates the same countries require $1.5 billion to scale up their effort to combat HIV/AIDS to an adequate level.
* Even after HIPC debt reductions, the 22 countries that have qualified so far will still spend more on paying debts than they currently spend on healthcare.
* Independent audits from two accounting firms show that the World Bank and the IMF could afford to completely cancel the debts owed to them by HIPC countries. After HIPC reductions for the first 22 countries, their debts to the IMF and World Bank will account for more than the next largest 17 creditors combined.
The Drop the Debt web site (http://www.dropthedebt.org) provides the e-mail addresses of the executive directors of the International Monetary Fund representing the G-7 countries (see below) and urges supporters of debt cancellation to write demanding full cancellation of the remaining debt.
NEW ON AFRICA ACTION WEB SITE
>From the Desk of Salih Booker (http://www.africapolicy.org/desk) features a Foreign Policy in Focus Commentary by Africa Action research associate Ann-Louise Colgan, on President Bush's nominee for Assistant Secretary of State for Africa, Walter Kansteiner. The nominee, she finds, fits the profile of the majority of Bush's middle-tier appointments, described in the Washington Post (March 25, 2001) as having 'eclipsed Reagan's in conservatism.' Neither Kansteiner's official biography nor news stories to date have highlighted his relationship with the far-right Institute for Religion and Democracy, which published his 1988 book on South Africa attacking the African National Congress as 'unrepresentative.'
Drop the Debt PO Box 5555 London SE1 OWG UK Tel: +44(0)20 7922 1111; +44(0)7970 175324 E-mail: email@example.com http://www.dropthedebt.org
News Release, 10 April 2001
For more information: Jamie Drummond/Lucy Matthew +44 (0) 961 346 334 In Washington, DC: Jamie Shor +1 -202 293 1001
Drop the Debt news release, 10 April, 2001
An independent firm of accountants unveiled a study today in Washington that shows the International Monetary Fund and the World Bank can afford to cancel 100 per cent of the debts they are owed by the poorest countries.
London firm Chantrey Vellacott DFK's research is contained in a new report by Drop the Debt, the short-term successor to Jubilee 2000 in the UK, which highlights how deeper debt cancellation is affordable and urgently required to fight the spread of HIV/AIDS in Africa. While G7 countries have pledged to wipe out the total debts they are owed by many of these countries, the IMF and World Bank have failed to do so.
The report "Reality Check: the need for deeper debt cancellation and the fight against HIV/AIDS" contains the following new findings:
* After the first 22 countries have been through the existing Heavily Indebted Poor Countries (HIPC) debt initiative agreed in 1999, they will owe more to the IMF and World Bank than they do to the next largest 17 creditors combined
* The IMF and the World Bank can afford 100 per cent cancellation through a number of options, including use of reserves and net income, without impacting adversely on their ability to carry out their objectives
* The 17 African countries that have benefited from HIPC will still spend $1.4 billion repaying debts each year; UNAIDS estimates the same countries require $1.5 billion to scale up their effort to combat HIV/AIDS to an adequate level
* Sub-Saharan Africa as a whole spends $13.3 billion repaying debts each year; the Global AIDS Alliance estimates that Sub-Saharan countries could need up to $15 billion each year to fight the spread of HIV/AIDS
* The annual cost of canceling HIPC debt owed to the World Bank and the IMF is $353 million and $368 million respectively - this is equivalent to a dollar each year for every person in the G7 countries
Adrian Lovett, Director of Drop the Debt, said: "The AIDS crisis is devastating Africa and the continent's biggest creditors, the IMF and World Bank, are still taking the money. They should take a reality check and act now to cancel the debt. From today, the old excuse that they cannot afford to do so is comprehensively demolished. "
Maurice Fitzpatrick, author of Chantrey Vellacott's audit found that "the existing debts due to the World Bank and IMF could be completely cancelled - without jeopardizing the ability of the World Bank and the IMF to carry out their overall functions."
The report was launched at a Drop the Debt/Oxfam conference and discussed by a panel including Adam Lerrick, Carnegie-Mellon University, Adrian Lovett, Drop the Debt, JoMarie Griesgraber Oxfam, Edith Ssampala, Ugandan Ambassador to the US, representatives from the IMF and World Bank, and Maurice Fitzpatrick, Chantrey Vellacott.
Notes for editors:
1. "Reality Check: the need for deeper debt cancellation and the fight against HIV/AIDS", including Chantrey Vellacott's audit of the IMF and World Bank's finances is online at www.dropthedebt.org from April 10
2. Drop the Debt is a UK based organization campaigning for a New Deal on Debt for the poorest countries by the time the world leaders next meet in Genoa, Italy in July 2001. The United Nations estimate that 19,000 children die a day in Africa because of the debt crisis
3. Global Development Finance 2001 was launched today by the World Bank, with the latest figures on debt by country and projected outlook for growth in developing countries.
10 April 2001
Reality Check: the need for deeper debt cancellation and the fight against HIV/AIDS
The Heavily Indebted Poor Countries (HIPC) initiative fails to meet the challenge of significant debt cancellation
* Average annual debt payments by the 22 countries which have begun to receive some debt relief are being reduced by a mere 27 per cent - or an aggregate $735 million per year
* This leaves these 22 countries still spending more repaying debts than they currently spend on healthcare
* The G7 countries have all promised to write off virtually all the debts owed by HIPCs; the IMF and World Bank will reduce debts owed to them by less than half
* Zambia and Niger both face increased debt service payments after qualifying for HIPC
The World Bank and IMF are the biggest remaining creditors to the poorest countries and independent accountants have confirmed they could write off 100 per cent of the debts of Heavily Indebted Poor Countries without impeding their ability to function
* After HIPC debt reduction, the 22 countries will owe more to the World Bank and IMF than to the next 17 biggest creditors put together
* The cost of going beyond the HIPC initiative to provide 100 per cent cancellation for these 22 countries will be $215 million per year for the World Bank and $287 million for the IMF; to extend it to all HIPCs would cost a further $138 million and $81 million respectively
* Independent research by accountants Chantrey Vellacott DFK offers proposals that would release more than $30 billion of resources to fund deeper World Bank / IMF debt cancellation
* Chantrey Vellacott state that if their proposals were followed, the World Bank and IMF could cancel 100 per cent of the debts owed to them by HIPCs without jeopardizing the ability of the World Bank and the IMF to carry out their overall functions
* The IMF can write off its debts to the HIPC countries, according to Chantrey Vellacott, by using the earning capacity of general reserves, together with a repeat of limited gold revaluation
* Chantrey Vellacott show that the World Bank can afford to cancel 100 per cent of HIPC debts owed to its two lending arms, IBRD and IDA, through prudent use of IBRD reserves and future net income, without impacting on the Bank's credit rating or its status as a lender
* Beyond their specific recommendations, Chantrey Vellacott also point out that the World Bank and IMF could afford to cancel even more given sufficient political will from their shareholders
* A second independent opinion on the capacity of the World Bank shows that deeper cancellation can be made possible through use of future reflows to IDA, which are projected to grow rapidly to bring in $2 billion more every year in 2016-20 than they do today
* If the G7 countries were to fund the write off of the World Bank and IMF's debts from HIPCs, it would effectively cost each of their citizens one dollar per year
Debt cancellation delivered so far is making a real difference to the lives of ordinary people - but it is not enough
* Funds released by debt cancellation are helping the poor, for example: doubling primary school enrolment in Uganda; vaccinating half a million children against killer diseases in Mozambique; providing three extra years of schooling in Honduras; and financing half of Guyana's national development plan
* Two-thirds of resources released by debt cancellation so far are being spent on health and education, with most of the remainder being used for HIV/AIDS, water supply, roads and governance reforms
Deeper debt cancellation is more urgent than ever in order to help fight HIV/AIDS and meet 2015 poverty reduction targets
* The 17 countries in Africa which have started receiving debt relief are still spending $1.3 billion per year on debt repayments - virtually identical to what UNAIDS estimates the same countries need to begin scaling up the efforts to fight HIV/AIDS
* Sub-Saharan Africa spends approximately $13.5 billion per annum repaying debts; the Global AIDS Alliance estimates that this region needs $15 billion to combat HIV/AIDS each year
* Sub-Saharan Africa, the continent most affected by debt, is the region faring worst against the 2015 targets to cut poverty by half; between 1990 and 1998 the proportion of Africans in extreme poverty increased, not decreased
New Deal on Debt is needed urgently in order to fight the HIV/AIDS emergency, to work towards the 2015 targets and to make levels of debt genuinely sustainable; A New Deal on Debt should include the following elements:
* 100 per cent debt cancellation for the poorest countries from wealthy creditors who have not yet committed to this, led by the World Bank, IMF and members of the Paris Club
* a trust fund for countries in conflict or with unacceptable human rights records so that their debt payments can be returned in the future to be invested in development
* significant debt cancellation for poor countries facing huge debt burdens which are not currently considered - in particular, Nigeria - and eligibility for cancellation based on the resources need to fight poverty
* increased efforts in debtor countries to fight poverty and disease using the funds from deeper debt cancellation, and an end to imposed conditions that hurt the poorest
* concrete steps to minimize the risk of a new debt crisis, through an increased proportion of future financing for poorer countries in the form of grants instead of loans; and the exploration of a new process to control unsustainable lending and borrowing
E-mail addresses of executive directors of IMF (from http://www.dropthedebt.org)
Karin Lissakers, US: firstname.lastname@example.org
Jean-Claude Milleron, France: email@example.com
Yukio Yoshimura, Japan: firstname.lastname@example.org
Bernd Esdar, Germany: email@example.com
Riccardo Faini, Italy: firstname.lastname@example.org
Thomas A. Bernes, Canada: email@example.com
Stephen Pickford, UK: firstname.lastname@example.org
Message-Id: <200104121259.IAA16156@server.africapolicy.org> From: "APIC" <email@example.com> Date: Thu, 12 Apr 2001 08:54:43 -0500 Subject: Africa: Drop the Debt
Editor: Ali B. Ali-Dinar
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