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BACKGROUND: Debt Relief
2/15/2005
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- Heavy debt burdens in the world’s most impoverished countries continue to draw precious economic resources away from critical needs like putting children in school, ensuring access to clean water, and the fight against HIV/AIDS. This year alone, countries in Africa will send an estimated $15 billion in debt service to the IMF, World Bank, and wealthy creditor nations.
- Many poor countries have begun to see their debts reduced through the Heavily Indebted Poor Country (HIPC) initiative, adopted in 1996 and expanded in 1999 in response to the global Jubilee 2000 movement, in which the Episcopal Church played a major role. Among the successes:
- Tanzania was able to eliminate school fees for elementary school education. Almost overnight, an estimated 1.6 million children returned to school.
- Mozambique increased rates of childhood vaccination against tetanus, whooping cough and diphtheria by more than 80% in the last two years. Additionally, $10 million is being spent on electrification for rural schools and hospitals, and rehabilitation of infrastructure following the floods. $3.2 million is being used to increase the number of girls attending school, and scores of new primary schools are being built.
- Uganda has doubled primary-school enrollment through the elimination of school fees, and has significantly improved the quality of schools and students’ performance on tests. Debt relief also played a key role in the government’s success in reducing HIV-infection rates by 40%
- Cameroon was able to implement a national HIV/AIDS strategic plan that has made voluntary testing and counseling widely available throughout the country and has reduced HIV transmission from pregnant women to their babies
- However, not all HIPC countries have achieved the same levels of success. HIPC has significant limitations, and many impoverished countries – Ethiopia, Rwanda, Zambia, and Malawi, to name a few – are not receiving sufficient debt relief.
- Deeper and more comprehensive debt relief is necessary if impoverished nations are going to meet the Millennium Development Goals or meaningfully address the global AIDS crisis that claims the life of an African child every minute. The G7 finance ministers’ agreement to pursue 100% multilateral debt cancellation for impoverished countries is a very encouraging sign. A significant amount of work remains, however, as there is deep disagreement between G7 nations – the U.S. and the UK, in particular – over how to finance debt cancellation.
- All of the debt-relief proposals currently under discussion are slightly different and have their own strengths and shortcomings. All, however, would achieve an important “next step” in lifting the burden of decades-old debt, while promoting transparency, better fiscal management, and poverty reduction in the world’s most impoverished countries.
- The U.S. government must be encouraged to provide leadership within the world community so that a final agreement on debt cancellation can be reached this year.
- The 1994 General Convention (affirmed by the 1997 and 2000 Conventions) directed the Episcopal Church to seek to “implement the biblical imperative of debt forgiveness by: participating in the development of sound financial plans for the reductions and cancellation of debts owed by the poor in our own society.”
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