World Bank Report Undermines Key Precedent of G-8 Debt Deal

Jubilee USA Calls on Leaders to Cancel Debts of All Impoverished Countries Including 18 in G-8 Deal, Without Harmful Economic Conditions

Jubilee USA Network * [url=][/url]

Wednesday, August 03, 2005

Contact:  Debayani Kar, 202-783-0215, 202-246-8143
Neil Watkins, 202-421-1023
WASHINGTON As the World Bank Executive Board meets tomorrow to discuss the (Group of 8) G-8 leaders June agreement on debt cancellation, Jubilee USA Network, the US arm of the global Jubilee movement, is concerned by a leaked World Bank staff report that calls into question the implementation of the already limited G-8 debt agreement. Combined with recent press reports that some International Monetary Fund (IMF) Executive Board members have proposed curtailing the scope of the G-8 agreement, Jubilee USA expresses concern that if implemented, the World Bank proposal would undermine a key precedent of the G-8 deal, that of 100% debt cancellation for 18 impoverished countries.

Jubilee USA had characterized the G-8 deal on debt cancellation as an important and precedent-setting first step, but one that falls short of what is needed to conclusively address the crisis of debt faced by the worlds impoverished nations. Jubilee USA Network is concerned that a new internal World Bank report on the G-8 debt deal questions the G-8 principle of 100% debt cancellation. Instead, the World Bank argues that the 18 initially eligible countries should receive debt cancellation based on continuing to implement harmful economic conditions, thus modifying the G-8 proposal to be revocable.

Any backtracking on the G-8 deal would result in serious consequences for those populations in the 18 initially eligible impoverished countries that urgently require the resources released through full debt cancellation. As an example, the president of Zambia, an eligible country, last week called for the IMF and World Bank to implement 100% cancellation of their debt immediately. The Zambian finance minister had announced in June that the funds released through debt cancellation would be used to provide AIDS drugs to almost 100,000 infected people.

At the conclusion of their July summit, the G-8 nations endorsed their plan to cancel the debt of 18 countries immediately, with an additional 9-20 countries being eligible for cancellation in the near future, said Debayani Kar, Communications/Advocacy Coordinator of Jubilee USA Network. Now, this already limited agreement which fell short of conclusively addressing the debt crisis for all impoverished countries and countries in crisis, while perpetuating devastating economic conditions looks to be under fire.

Jubilee USA Network has produced a 14-page analysis of the G-8 debt agreement, entitled First Step on A Long Journey: Putting the G-8 Deal on Debt into Perspective. The report highlights the benefits of the G-8 debt agreement, while detailing its limitations, and provides recommendations of next steps. The report and executive summary are available at [url=][/url]

Some of the key findings of the Jubilee USA analysis:

∑ Debt Cancellation Will Save Lives. The agreement, in addition to setting the important precedent of 100% debt cancellation for some nations to some creditors, will release close to $1 billion annually in resources poor nations can use for development.
∑ The G-8 Plan Includes Too Few Countries. The 18 countries that qualify immediately represent less than a third of countries (at least 62) that need full cancellation to meet the internationally agreed Millennium Development Goals (MDGs), which seek to halve extreme poverty by 2015. The $40 billion to be cancelled by this agreement represents less than 10% of debt cancellation required for nations to meet the MDGs. The plan does not include middle-income countries that are heavily indebted and impoverished.  The African Union called earlier this week for all African nations to receive debt cancellation; the G-8 agreement applies to only 14.
∑ The G-8 Plan Contains Onerous Conditions. The economic policies mandated by the Heavily Indebted Poor Country (HIPC) Initiative will continue under the G-8 debt agreement, including privatization of government-run services and industries, increased trade liberalization, and budgetary spending restrictions. These policies have not been proven to increase per capita income growth or reduce poverty as documented by both World Bank and civil society economists. Jubilee USA and social movements call for these conditions and policies to be abandoned.
Jubilee USA Network notes that the G-8 debt agreement is an important first step towards the Jubilee vision of a world where external debt no longer diverts resources from impoverished people or constrains policy choices. In addition to ensuring the agreement is implemented for these 18 initially eligible countries, Jubilee USA Network will expand its campaign in the years ahead to work for debt cancellation for more countries (such as impoverished countries not included in this deal, middle income countries with large impoverished populations and those with odious/illegitimate debts) and creditors (such as the Inter-American Development Bank, Asian Development Bank, bilateral, and private creditors) not included in this year’s initiative.

Jubilee USA Network is the US arm of the international movement working for debt cancellation for impoverished nations. Jubilee USA is a network of over 70 religious denominations, labor groups, environmental organizations, and community and advocacy groups working for freedom from debt for countries in Africa, Asia, and Latin America. 

Posted by Nuttshell on 08/12 at 01:31 PM in Politics

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