Gordon Brown claims his new proposals for debt relief amount to 100 percent debt cancellation for the poorest countries. But in reality they amount to very little indeed.
What’s on offer is “debt service relief” between 2005 and 2015. This means the British government will pay the debt repayments to the International Monetary Fund (IMF) for some countries.
However only 23 countries are eligible for this help — less than half the 53 countries that the Jubilee 2000 campaign identified as needing immediate and full cancellation.
And after ten years, even the countries that are eligible for this help will still be left with 70 percent of their debts outstanding.
To compound matters, the amount of money that debtor nations have to hand over every year is due to rise significantly between 2005 and 2015.
Total yearly payments by the 53 poorest countries to the IMF are set to rise from $497 million in 2005 to $1,116 million by 2015, according to the treasury’s own figures.
Caroline Pearce from the Jubilee Debt Campaign says that even people who are trying to work with Blair and Brown can see how disgraceful the current situation is. “Debt is used as a tool of control — when the debt mounts up hugely, they say, ‘We’ll write off this tiny bit of debt, in return for a whole new set of conditions’,” she says.
“For example in 2004 the IMF said to Zambia that if they wanted to qualify for any debt cancellation, they would have to impose a public sector pay freeze.
“As a result of that, Zambia had around 9,000 teachers that it was not able to employ. The IMF said they weren’t allowed to spend money on things like teachers and doctors.
“Africa’s current external debt is around $330 billion. And African countries pay $65 million a day in debt payments. For every $1 that is given to the African countries, $3 is taken out — and that’s without looking at trade.
“From the 1970s to 2002 the African countries were lent $540 billion. They have paid back $550 billion and are left with a debt of over $300 billion.
“It’s even more outrageous when you look at individual countries. Nigeria borrowed $17 billion, paid back $18 billion and now owes $34 billion. It’s mind boggling.”
And because of the way that the British government qualifies the aid it gives, some of the poorest countries are not eligible for this new help — Nigeria is one example.
The world’s poorest countries will remain in poverty as long as these debts remain. The British government needs to do more than talk about 100 percent debt cancellation — it needs to provide it.