Debt cancellation remains the main objective

by Art Babych

Canadian church development agencies and their international counterparts have welcomed Canada’s moratorium on debts by the world’s poorest countries but a national ecumenical coalition says the global effect is “a drop in the bucket.”

Canada is owed less than one half of one per cent of impoverished country debt, said John Dillon, of the Canadian Ecumenical Jubilee Initiative. “The amount of debt relief offered under the Enhanced HIPC Initiative is inadequate.”

Gerry Barr, president of the Canadian Council for International Co-operation (CCIC), said: “We do appreciate the gesture, coming a few days before the end of this Jubilee year, but total and immediate debt cancellation remains the main objective. This fight continues.”

Finance Minister Paul Martin announced the debt moratorium at a news conference on Parliament Hill Dec. 19. Canada is owed about $1.1 billion by 17 Heavily Indebted Poor Countries (HIPC) and 11 of the nations with debts of about $700 million are to benefit from the moratorium as of Jan. 1, 2001.

The other six are to be considered once they demonstrate they are “fully committed to the principles of peaceful development and good governance, including the protection of human rights,” Mr. Martin said.

“The current debt levels carried by the world’s poorest countries are quite simply unsustainable,” Mr. Martin said. “A debt moratorium will free up resources that indebted countries could spend on urgent social priorities such as health care, education and poverty reduction.”

But the finance minister also acknowledged that debt relief is not an end in itself. “It represents but one important contribution to the growth and development of the poorest of the poor nations,” he said. “We in the industrialized countries have to be looking at ways to ensure that the poorest are able to participate in and reap the benefits of an increasingly inter-connected world economy.”

His announcement follows a speech he made in Prague, Czechoslovakia, last in September at a meeting of officials of the World Bank and International Monetary Fund.

In it, the finance minister said that at a time of “unprecedented prosperity in many industrialized economies, it is unacceptable that the promised debt relief has not been delivered.”

In late 1997, the church-based Canadian Ecumenical Jubilee Initiative gathered 640,000 signatures for a massive international campaign for world leaders to cancel the debts of the poorest nations by the year 2000.

Mr. Dillon said the CEJI now “reiterates its call for the complete and unconditional cancellation of bilateral and multilateral debts of the world’s poorest countries; ending the imposition of Structural Adjustment Programs; and the assessment and cancellation of the illegitimate debts of developing countries.”

The CCIC, made up of Canadian international development agencies, commended Mr. Martin for the moratorium and urged him to “continue playing a leadership role in working for an extension of the moratorium to the debts held by other bilateral creditors and particularly those owed to multilateral financial institutions.”

The organization also suggested the moratorium be coupled with the de-linking of debt relief from what it called “onerous structural adjustment conditions.”

Non-governmental organizations see it as critical that more of the world’s poorest countries’ debts be cancelled to allow them to focus on assisting people living in extreme poverty.

Mr. Martin said the principle and interest paid to Canada by the countries affected by the moratorium last year totaled almost $20 million. “So we’re talking real money that ought to be going to health care and education as opposed to paying off creditors.”

Mr. Martin said the countries that made the list were those demonstrating a capacity for good government and that were respectful of human rights. The penalty for countries that don’t devote funds on health care and education is to end the moratorium, he said. “This is not a forgiveness of the interest payments.”

The countries affected by the Canadian moratorium are Benin, Bolivia, Cameroon, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Senegal, Tanzania and Zambia.

Art Babych is a freelance writer based on Parliament Hill in Ottawa.

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