The under-signed civil society groups welcome the belated official acknowledgement that existing debt relief efforts have manifestly failed to secure the promised “robust” exit from the burden of unsustainable debt. Only US$ 54 billion has been cancelled so far while the 61 low-income countries still owe around US$ 600 billion (1). Total developing country debt stands at around US$ 2.4 trillion. (2)
It is now widely accepted that under current conditions the Millennium Development Goals will not be met for another 100 years. This is particularly the case for the countries of Sub-Saharan Africa. The high debt service payments of many countries is a major obstacle to efforts to reach these agreed goals and achieve social justice in countries where very large numbers of people are suffering. Debt servicing restructures economies and diverts needed funds from social investment. Indeed there is a net flow of money from South to North at present, with debt repayments and profit repatriation larger than aid. For example, in 2002, there was a net transfer of US$ 95 billion from South to North. (3)
Northern governments have recently made a series of commitments to assist Southern countries. Not only are they failing to honour these promises, they are also refusing to accept moral and financial responsibility for loans provided for commercial and geo-political reasons. The World Bank also refuses to accept responsibility for exacerbating indebtedness in poor countries by providing new loans simply to roll over old loans.
Current proposals: extremely limited
We welcome any serious efforts to secure further debt cancellation but concrete commitments to date fall very far short of what civil society groups demand. The claim that these proposals represent “up to 100% multilateral debt cancellation” is extremely misleading.
We have carefully studied the different proposals put forward for the G8 summit. We consider that they all:
1) Cover very limited numbers of countries (between 5 at worst and 24 at best). For instance many countries which are facing debt crises are completely excluded.
2) Exclude debts to important creditors such as the Inter-American Development Bank, the Asian Development Bank and the IMF.
3) Are too closely tied to supposed good performance under harmful conditions established by the World Bank and IMF. These typically include privatisation, liberalisation and public spending cuts.
4) Only include very limited new funding pledges from a small number of creditor countries.
5) Fail to recognise creditor co-responsibility for the debt crisis or call for debtors and creditors to be placed on an equal footing in the design and implementation of solutions to the debt crisis.
Civil society demands
We welcome any progress towards debt cancellation but will continue to point to the need for much bolder steps to end debt domination. This is a matter of fundamental justice and an essential step if international agreements are to be respected.
We, the undersigned civil society organisations therefore reiterate our calls for:
o The cancellation in full of the debts of all South countries, starting with the most impoverished and countries in crisis. Debt service cancellation over 10 years is not enough since come 2015, around 70% of poor country debt will still remain on the books. (4)
o This cancellation to be carried out in such a way that governments have more money to spend on their peoples’ welfare. This implies that money be taken from the multilaterals’ reserves and extra contributions from Northern governments. (5)
o This cancellation should be unconditional.
o Creditors to recognise their co-responsibility for odious debts.
o The international architecture governing debt and finance to be fundamentally overhauled so that debtors and creditors are placed on an equal footing.
South/North Civil Society Debt Group
The South/North civil society working group on debt is composed of networks and organisations across the globe working for social justice and a lasting solution to the debt crisis. It was established at the Global IFI strategy meeting in Accra, Ghana, February 2005.
Members: Jubilee South, Afrodad, Kairos Canada, Halifax Initiative Canada, 50 Years is Enough (USA), Jubilee USA, Campagna per la Riforma de la Banca Mondiale (CRBM - Italy), Comité pour l’ Annulation de la Dette du Tiers Monde (CADTM), Slug (Norway)
(1) Figures taken from the Organisation for Economic Cooperation and Development (OECD), see external debt statistics>:
http://www.oecd.org
(2) Figures from OECD, see:
http://www.oecd.org
(3) Comité pour l’Annulation de la Dette du Tiers Monde (CADTM), 2003. See:
http://www.cadtm.org
(4) Multilateral Debt Cancellation: Recent Proposals Explained, Sony Kapoor for Eurodad, January 2005, see:
http://www.eurodad.org/articles/default.aspx?id=576
(5) See African NGO Statement on Debt Cancellation Proposals, coordinated by Afrodad, March 2005. See: http://www.eurodad.org/articles/default.aspx?id=611
See also, Multilateral Debt Cancellation: Recent Proposals Explained, Sony Kapoor for Eurodad, January 2005, see:
http://www.eurodad.org/articles/default.aspx?id=576
