1 July 2005
Jubilee USA Network is a diverse gathering of organizations who have come together in response to the international call for Jubilee debt cancellation for the developing world. The network consists of organizations of labour, faith, HIV/AIDS and development advocates and over 9,000 individual members.
G8RG: What do you think are the prospects of the G8 making further concessions on debt cancellation?
Debanayi Kar: I have to be hopeful about the prospects for the G-8 expanding its proposal for 100% debt cancellation to all impoverished countries. People of faith and conscience around the world have helped push our governments beyond the limited bilateral debt cancellation enacted by G-8 governments in 1999/2000 to the point of this year's June 11th agreement to cancel 100% of the debts to the IMF, World Bank, and African Development Fund for 18 countries.
But we cannot afford another five years of delay before all impoverished nations' debts to all multilateral creditors are cancelled. Not as 30,000 children die of preventable diseases every day.
In addition, as they have done in canceling Iraq's debt, the G-8 nations must recognize the odious and illegitimate nature of much of the debt held by heavily indebted and impoverished countries, such as in Indonesia, South Africa, and the Philippines.
A challenge will be in forcing the G-8 to acknowledge that the economic conditions attached to debt cancellation are harmful, and have not increased per capita income growth nor reduced poverty in the developing world.
G8RG: Why did the G8 not make these greater concessions in the first place?
Debanayi Kar: There are 20 additional countries, beyond the 18 that will receive 100% debt cancellation immediately, that are classified as Heavily Indebted Poor Countries (HIPC) by the IMF and World Bank. For these countries to obtain 100% cancellation, they will need to continue implementing a range of economic policy conditions. These conditions include 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.
These conditions are attached to the HIPC Initiative because of the G-8's mistaken notion that these policies will increase growth and reduce poverty, though the last 25 years of evidence does not support this claim.
There are many countries outside of the HIPC Initiative that are also heavily indebted and impoverished. These additional countries have not qualified for HIPC debt relief and now cancellation because they have not met the unreasonable criteria used to classify countries as HIPCs. In addition, middle-income countries with substantial odious and illegitimate debt burdens, such as Indonesia and the Philippines, have been completely ignored by the G-8 debate on debt cancellation. There is some hope that the 80% write-off of Iraq's debt using the logic of illegitimacy since the money was borrowed by a dictator and not used to help the country's population will support similar arguments for cancellation of other countries' odious and illegitimate debts.
The G-8 has argued for a limited country list and ignored other multilateral creditors because they say further cancellation is unaffordable. But resources do exist to finance further debt cancellation. One financing option that had been proposed by the U.K. government was the limited sale of the IMF's gold reserves, which the IMF demonstrated as being feasible in a March report. Another potential resource at the international financial institutions is the accumulated and future profits of the World Bank. Drawing funds from the IMF's low-income lending arm is another possibility, which apparently the U.S. considered during the course of the G-8 debt negotiations.
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