Campaigners call for Latin American debt cancellation
01 August 2006Campaigners are piling pressure onto the Inter-American Development Bank (IADB) to cancel debts being paid by Bolivia, Guyana, Haiti, Honduras and Nicaragua. These five countries are the poorest in Latin America - and over the next eight years are scheduled to pay between them over $3 billion to the IADB. All these countries are officially classified as eligible for the Heavily Indebted Poor Countries (HIPC)initiative, which - though too slow, too limited and with harmful conditions attached - does offer some debt cancellation. Bolivia, Guyana, Honduras and Nicaragua have all completed the scheme and had some debts cancelled. Haiti was only added to the list of eligible countries in April 2006, and has yet even officially to enter the scheme. However, even for those that have completed HIPC, huge and crippling debts remain. Under pressure from campaigners, the G8 and the rest of the rich world agreed in 2005 on extra debt cancellation for countries that complete HIPC, through a scheme known as the Multilateral Debt Relief Initiative (MDRI). But MDRI only includes debts being paid to the World Bank, the International Monetary Fund (IMF) and the African Development Fund. It does not include debts to the Inter-American Development Bank or other development banks - leaving these countries still servicing huge debts at the expense of their people. Guyana, for instance, has been spending far more on debt than on both health and education. Of the 20 countries that have qualified so far, 16 are African, but the remaining four - Bolivia, Guyana, Honduras and Nicaragua - are Latin American. The exclusion of the IADB means that whilst countries like Uganda and Ghana are seeing nearly 80% of their debts cancelled through MDRI, Guyana and Nicaragua are seeing barely 20% of their debts cancelled. Campaigner pressure is focused on the bank’s major shareholders: the US and larger South American countries. So far the Bank's shareholders have been discussing the issue, and even making some proposals - but there has been no breakthrough yet.