$347m of Togo's debt cancelled
The Club - an informal group of creditor rich country governments - cited the food crisis as the main reason why Togo had been granted the moratorium.
JDC has been campaigning for debt cancellation or a moratorium on payments for countries suffering from a development crisis in the face of sharply escalating prices. We have been calling on the G8 to push for immediate debt cancellation for very poor countries like Haiti, which has suffered food riots in recent months.
The IMF and World Bank must now follow the Paris Club’s lead and speed up Togo's entry into the Highly Indebted Poor Country (HIPC) debt relief scheme, which would permanently cancel much of Togo's debt burden.
But it is also important that the IMF and World Bank drop the use of economic policy conditions. After all, it is this economic 'medicine' that has played a large role in creating the food crisis in the first place.
The combination of several policies which the IMF and World Bank have pushed - including removal of state subsidies for food production and a reduction in spending on agriculture - have resulted in steep increases in the costs of producing food, and a big switch from using land to produce staple food for domestic consumption to using land to produce food or fuels aimed at the export market. This switch has tended to involve higher use of expensive imported fertilisers and pesticides.
Meanwhile, developing country markets have been forced open and small local producers have had to compete with subsidised mass produced food from the North. Destruction of agricultural sectors has often followed.
Take Haiti as an example. After years of being forced to compete with US-subsidised rice coming into the country, traditional rice-farming areas of Haiti now have some of the highest concentrations of malnutrition, and a country that was self-sufficient in rice is now dependent on foreign imports, at the mercy of global market prices. Togo will certainly be expected to fulfil a number of conditions to ensure that its debt moratorium is maintained until 2011.
So Togo's partial debt cancellation is a great success but it is not the end of the story. We must now go further:
- The World Bank and IMF must speed up cancellation of Togo's remaining debts.
- These institutions must call for debt cancellation, or a moratorium on debt repayments for other countries affected by the food crisis.
- Economic policy conditions must be removed from debt relief.
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