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Contributions from
the Column
Facts and trends
WFP opposes strict WTO rules
G8 cancels debt and cuts aid
Climate protection after Kyoto
EU looks for its role in development policy
Africa suffers from lack of harmonisation
KfW Development Bank gains
Spam mails impede development
Aid does not reach the poor
Trade: Renminbi appreciation would have no effect
07/2005
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[ Debt relief ]
G8 cancels debt and cuts aid
After tough negotiations at a meeting in June, the finance ministers from the seven largest industrialised countries and Russia agreed to cancel the multilateral debts and interest payments of 18 highly indebted poor countries amounting to 40 billion US dollars. The decision means that those countries that reached the completion point of the HIPC Initiative and therefore already qualified for debt reduction will be forgiven all outstanding debts with the World Bank, the International Monetary Fund and the African Development Bank (AfDB). At the same time, however, flows by World Bank daughter IDA and by AfDB to the favoured countries will be cut by the amounts forgiven, according to the German debt relief initiative erlassjahr.de. The German Finance Ministry confirmed this to erlassjahr.de.
The United Kindom and the United States above all, had been pushing for a complete multilateral debt cancellation for a long time. Of course, the biggest hurdle to date has been the US administration’s refusal to refinance it: the USA wanted to write off the debts without compensation but several European countries insisted on paying the costs of the affected multilateral institutions so they are not weakened (see E+Z/D+C 2005:3, p. 94). British Prime Minister Tony Blair obviously succeeded in winning US president George W. Bush over to the refinancing shortly before the meeting of finance ministers.
While the donor countries spoke of a “historic decision”, non-governmental organisations and debt relief initiatives were cautious in their comments. An erlassjahr.de press release maintains the step is in the right direction but the group of countries that will benefit is too small. Debt relief was necessary for all poor countries whose need for it has been established according to objective criteria. In addition, keeping in mind the cuts in new pledges by IDA and AfDB the cancellation was actually a “zero-sum game”.
Several of the developing countries that have not benefited also expressed criticism. The Kenyan Planning Minister Peter Anyang Nyongo said that countries like Kenya that had always serviced their debts are being ignored, while the unreliable debtors have been let off. Nyongo said: “This was not a good day for Africa.” (ell)
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