Debt moratorium for tsunami countries not enough

Many poor people hit by the devastating Indian Ocean tsunami will be unable to rebuild their lives unless rich nations today cancel a significant part of the debts owed by their countries, as well as freeze repayments on remaining debts.

This warning came from the Jubilee Debt Campaign (JDC) before the ‘Paris Club’ of official creditors meets in the French capital to discuss the huge debts owed to them by the countries affected by the Indian Ocean disaster.

JDC, a coalition which includes ActionAid, CAFOD, Christian Aid, Oxfam and the World Development Movement, said the money saved through debt cancellation or suspension could make a huge difference in funding poverty reduction and reconstruction. The money spent by Indonesia on one day’s debt repayments, for instance, could instead pay for 100 much-needed aid flights. The money must be spent accountably and transparently - but extra cash must not come with the harmful policy conditions usually attached to debt relief, such as forcing countries affected by the disaster to privatise essential public services, which would further hurt poor people.

Ashok Sinha, JDC Coordinator, said: "We welcome moves to suspend debt repayments by tsunami-hit countries. But this is not enough. These countries need significant levels of permanent debt cancellation in order to invest in reconstruction, as well as tackle the long-term poverty they experienced even before the waves struck.

"The tsunami has shown the horrific and devastating impact of unpreventable natural disasters. But global poverty, of which debt repayments are a major cause, kills as many people as the tsunami every week. This appalling loss of life is preventable. It we are to build a world free of poverty, the Paris Club and G7 must not only address the debts of the tsunami-hit countries, but also cancel 100% of the unpayable debts of all the world’s poorest countries."

The coalition said debt relief for tsunami-affected countries must not come at the cost of providing debt relief for other poor nations. Cancellation of unpayable debts for all the poorest countries is essential to reduce poverty and achieve the UN Millennium Development Goals. The poorest countries give over £30 million a day to rich countries in debt repayments - vital resources that could be used on desperately-needed poverty reduction.

The coalition said any decision to ease the debt burden on tsunami-hit countries should be linked to broader debt relief for the poorest countries when finance ministers for the G7 rich nations meet in early February. It seeks an urgent, open and independent review of what debts tsunami-affected countries can afford in the long-term, as well as levels of ‘odious debt’, incurred by past dictators. All unsustainable and odious debt should be cancelled, the coalition argues.

ENDS

NOTES

1. Indonesia owes the UK government £776.64 million (GBP) – a large proportion of this amount is for arms. With no moratorium, Indonesia would pay £73 million to the UK next year.
2. Japan, owed $29bn by Indonesia, remains by far Indonesia’s biggest creditor. Last year Indonesia’s debt repayments were 10 times higher than its spending on health and 33 times more than its housing budget.
3. Global campaigners’ pressure helped win a two-year debt moratorium for Honduras and Nicaragua following Hurricane Mitch in 1999 and after the floods in Mozambique a year later. But, the coalition warns, a moratorium only postpones the problem and fails to tackle the cause of poverty.
4. Jubilee Debt Campaign and coalition members are planning a stunt in central London on Tuesday 18 January, in solidarity with an international day of action demanding that the G7 countries drop the debt. For more details on this event, contact Dave Timms, Press Officer, WDM: 07711 875 345 or dave@wdm.org.uk.

CONTACTS

• ActionAid: Paul Collins, Media Officer, 07952 962057 or paul.collins@actionaid.org
• Oxfam: Brendan Cox, Press Officer, 07818 406 038 or bcox@oxfam.org.uk
• WDM: Dave Timms, Press Officer, 07711 875 345 or dave@wdm.org.uk
• Christian Aid: Jonathan Glennie, Senior Policy Officer, 07881 780 060 or jglennie@christian-aid.org
• JDC: Ashok Sinha, Coordinator: 020 7324 4722 or 07905 139 140 or ashok@jubileedebtcampaign.org.uk