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Africa: Oxfam Debt Statement, 1
Africa: Oxfam Debt Statement, 1
Date distributed (ymd): 970423
Document reposted by APIC
This posting, and the next, contain the executive summary of a new Oxfam
International policy paper published this month. The full text of the paper,
which includes additional background on Uganda, Mozambique and other African
countries, can be found on the Oxfam Web site at
http://www.oneworld.org/oxfam/policy/papers/debtdawn.htm -- page no longer available 11/99
The Oxfam International Advocacy Office can be contacted at 1511 "K"
Street, Suite 1044, Washington DC 20005, USA; Tel: 1 202 393 5332; Fax:
1 202 783 8739; Email: oxfamintdc@igc.org.
Poor Country Debt Relief: False Dawn or New Hope for Poverty Reduction?
Executive summary
"My deepest wish is to go back to school. I haven't been for many
years, but I remember it was a good time. It will be a beautiful day for
me when I can learn to read and write. Then I will be happy."
Anna Asiimwe is a nine-year-old girl living in the Kabale district of
southern Uganda, one of the poorest regions in one of the world's poorest
countries. She has something in common with over two million other children
in her country, and many millions more across Africa and other developing
regions: Anna Asiimwe is not in primary school. From Uganda to Ethiopia,
Mozambique, Bolivia and Nicaragua, a crushing burden of foreign debt results
in governments spending more repaying creditors than they spend on the
health and education of their citizens. Inadequate public spending on social
provision means that families must meet the costs of education out of their
own pockets, and Anna's parent are too poor to pay. Until last year prospects
for change appeared bleak. Then the Government of Uganda announced an ambitious
plan to provide free primary school places for up to four children in each
family.
The plan, an element in the Ugandan Government's strategy for eradicating
poverty, was to be financed partly through domestic revenues; and partly
by transferring savings from debt reduction provided under the Highly Indebted
Poor Countries (HIPC) initiative, which was adopted by the Boards of the
International Monetary Fund (IMF) and the World Bank in September, 1996.
Along with around 30 other children in her village, Anna Asiimwe was registered
for a place in primary school. Her hopes for an education and a better
future soared. Now they have plummeted. Having promised early debt relief
for Uganda, some of the world's most powerful countries have used their
influence to delay action for at least one year. The Ugandan Government
is sticking to its plan for providing free education. But faced with a
higher than expected debt repayments bill, the timetable for implementation
has been delayed. For Anna Asiimwe and other children in her village, it
means another year without school, another lost opportunity.
Debt problems are usually measured in terms of cold financial data.
Public debate is discouraged by the obsessive secrecy of creditor governments
and international financial institutions, and by impenetrable technical
jargon. But behind this dense fog, the debt crisis wears a human face.
It is the face of a young girl - a girl like Anna Asiimwe - denied an opportunity
for the education which could lift her out of poverty because some northern
governments regard national debt repayment as a higher priority than her
schooling; it is the face of a child whose mind and body are not growing
properly because of recurrent infectious diseases - diseases which could
be prevented by transferring a fraction of what is spent on debt to primary
health care; and it is the face of a women forced to walk for several hours
to fetch water because the claims of foreign creditors have decimated the
national budget for water provision. These are the faces of people whose
voices go unheard at the debt negotiating table, but whose lives are profoundly
affected by debt, and by the actions - and inaction - of creditors.
The debt crisis facing the poorest countries has been discussed too
politely for too long. Such politeness implies a tacit acceptance of a
situation which ought to be regarded as intolerable. Allowing debt to destroy
the growing minds and bodies of young children, to undermine communities,
and to further erode the position of the poor is the antithesis of civilised
behaviour. Nothing can justify it - and it should not be tolerated.
Effective debt relief would provide the resources needed for a sustained
assault on poverty, improving prospects for child survival and human development
across a large swathe of the developing world. It would also provides an
opportunity for governments of the industrialised world to take their own
rhetoric on poverty reduction seriously. Seven years ago, at the World
Summit for Children, they pledged support for an ambitious programme of
human development. Two years ago they gathered again at the Copenhagen
Summit for Social Development to reaffirm that pledge, and to promise co-operation
in providing the resources needed to achieve “the elimination of hunger
and malnutrition, the provision of food security, education (and) primary
health services, including reproductive health care, safe drinking water
and sanitation”. Too often, such commitments are forgotten as swiftly as
they are made, recalled only as an increasingly vacuous echo down the years.
Today, debt reduction provides an obvious mechanism for translating noble
declarations into action.
There is another reason for taking decisive action on debt reduction.
It is rooted in the self-interest of creditors. At present, debt is fuelling
a vicious circle of rising poverty, economic stagnation and increased social
tension, contributing to processes which threaten to culminate in the collapse
of states and econmic disintegration. The rest of the world will not be
immune to the humanitaran and economic consequences of dealing with a growing
number of Zaires, Liberas and Rwandas. These consquences can be averted.
Yet there is a paralysis in international co-operation - and nowhere more
so than in matters of debt relief.
Threats and opportunities
This Briefing carries two simple messages. The first is that there is
now an unprecedented opportunity to end the debt crisis in the poorest
countries. That opportunity is provided by the Highly Indebted Poor Countries
(HIPC) initiative agreed last year by the Boards of the IMF and World Bank.
True, there are problems in the design of the HIPC framework. In particular,
the time-frame for implementation is too long, the debt-sustainability
thresholds have been set too high, and debt relief has not been integrated
into a broader programme for advancing human development. Reforms are needed
in each of these areas. But the HIPC initiative still provides for the
type of comprehensive and integrated approach which could achieve debt
sustainability. The second message is that, for all its potential, the
HIPC initiative stands on the brink of failure. Seven months ago, the World
Bank's President, Jim Wolfensohn proclaimed the new debt relief framework
"good news for the world's poor."
In recent months, a steady stream of positive and self-congratulatory
public statements from the IMF and World Bank have reinforced this view.
Such messages seriously misrepresent reality. Two of the strongest candidates
for early debt relief - Uganda and Bolivia - have been treated shamefully.
Neither will see any reduction in their debt burden until next year, and
both will suffer significant losses of foreign exchange as a result. Most
other candidates for debt relief will be placed on the back-burner until
2000 and beyond.
Far from being good news for the poor, the HIPC framework stands in
grave danger of becoming a monumental irrelevance. What has gone wrong?
In short, the political will to make the HIPC initiative work has been
lacking. Some of the most powerful Group of Seven (G7) countries - Germany,
Japan, and Italy - opposed the initiative from the outset, and are now
using their influence on the Boards of the IMF and World Bank to delay
implementation and minimise the level of debt relief provided. Unfortunately,
they have now been joined by the US. Previously a strong supporter of the
HIPC framework, the US Treasury is now seeking to delay implementation,
even for countries with exemplary track records.
For its part, the IMF has played a highly destructive role. Two years
ago, the IMF denied the existence of a debt problem and ruled out participation
in any debt reduction. Today, the Fund's management and technical staff
are developing foot-dragging on implementation into an art form, supporting
the efforts of those G7 countries seeking to undermine the substance of
the HIPC initiative while keeping its packaging intact. One of the primary
concerns of the Fund has been to minimise the costs to itself of financing
debt relief, placing narrow institutional self-interest over the needs
of the world's poorest countries. This is scandalous abuse of power and
authority, for which the Fund's Managing Director, Michael Camdessus, must
accept prime responsibility.
A challenge to the World Bank
Set against this powerful array of political forces, advocates for the
debtor governments are thin on the ground. The British Government has played
a crucial role in pressing for flexible implementation of the HIPC framework.
It has been supported by the governments of Australia and New Zealand.
World Bank staff have also attempted to develop the initiative in a constructive
spirit. Where leadership has been lacking is at the highest political level
of the World Bank. Without the personal commitment of Jim Wolfensohn, it
is unlikely the HIPC framework would have seen the light of day. For that
he deserves credit. But the World Bank President is now failing to drive
the initiative forward.
This is not in the best interests of the World Bank. Recently, Mr Wolfensohn
received the backing of shareholders for his Strategic Compact - a vision
for the World Bank in the 21st century. That vision, in the opening words
of the Compact, is "to achieve greater effectiveness in the World
Bank's basic mission - poverty reduction." Improving access to basic
social services is identified as central to the success of this mission.
But if the World Bank President is incapable of persuading key governments
on his Board to implement a modest proposal for reducing the crushing burden
of debt on the poorest countries, what hope is there of him delivering
on the Strategic Compact?
In short, none at all. That is why Oxfam International sees the HIPC
initiative as a litmus test of Mr Wolfensohn's commitment to poverty reduction,
and of his capacity to recast the World Bank as a force for enhancing the
interests of the poor. There is a growing sense that, for all the encouraging
rhetoric on poverty reduction to emerge from the World Bank since Mr Wolfensohn's
arrival, there has been little delivery of substance. This perception would
change if he took a principled stand on behalf of the poor in debtor countries,
openly challenging the IMF and those G7 countries bent on consigning the
HIPIC framework to a slow death. Oxfam International urges the World Bank
President to confront his Board with a simple message: "Back me in
making the HIPC initiative work, or I will be unable to realise my longer-term
vision for the Bank as an agency for poverty reduction." Failure to
deliver on debt reduction now gravely threatens the credibility of the
multilateral system. More immediately, it threatens the livelihoods of
poor people. Without a renewed sense of purpose and political vision, the
HIPC initiative will unquestionably fail. There are doubtless many diplomatic
formulations which could be arrived at to explain such an outcome. But
stripped of diplomatic niceties, what is happening in the Boards of the
Bretton Woods Institutions is an outrage perpetrated against a large and
highly vulnerable section of humanity. Ultimately, the actions of those
responsible for delaying debt reduction is resulting in lost opportunities
for human development, and - in the last analysis - lost lives.
We state this fact bluntly because it is the harsh reality. In 1990,
international political leaders gathered at the World Summit for Children
to agree a plan of action for reducing child deaths by half over the next
decade, along with other human development targets. The external finance
needed to achieve these objectives through investment in primary health,
nutrition, and water and sanitation is considerably less than is being
spent on debt. These are precisely the investments which Mr Wolfensohn
says he wants to encourage. Yet despite the opportunity created by the
HIPC framework, debt relief is not regarded by his Board as a poverty issue.
The human costs of this lost opportunity for human development will
be high. In this Briefing we review the National Plans of Action for achieving
the targets set at the World Summit for Children for seven countries in
Africa. In each case, debt relief could make a decisive contribution, helping
to create the foundations for a sustained assault on poverty. In each case
the potential welfare gains are enormous - and they are achievable. For
the seven countries reviewed, successful implementation of the national
plans would save the lives of 3.2 million children over the next seven
years. Viewed in a different light, continued obstruction on the part of
the IMF and the governments of Germany, Japan, and the US will help to
consign the same children to an early grave.
(continued in part 2)
This material is being reposted for wider distribution by the Africa
Policy Information Center (APIC), the educational affiliate of the Washington
Office on Africa. APIC's primary objective is to widen the policy debate
in the United States around African issues and the U.S. role in Africa,
by concentrating on providing accessible policy-relevant information and
analysis usable by a wide range of groups and individuals.
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