Djibouti
- Total external debt: $424.2 million
- Total external debt payments: gives $18.2 million each year to the rich world in debt payments.
- Population: 793,100
- Average life expectancy: 53.9 years
- HIV prevalence: 3.1%
- Total health spending: 2.4% of GDP (2003)
- Total spending on debt service payments: 2.6% of GDP
- Annual GDP: $0.7 billion
(Statistics are latest available, mostly 2005, from World Bank and UN Human Development Report)
DROP THE DEBT FAST
Djibouti is the focus of the Drop the Debt Fast on Tuesday 29 April.
Background
Djibouti’s main economic advantage is its location. Controlling access to the Red Sea, the country is of major strategic importance, a fact that has ensured a steady flow of foreign assistance. The economy is based on service activities (82% of GDP) related to this strategic location and its status as a free trade zone in northeast Africa.
Political history
After gaining independence from France in 1977, the first president, Hassan Gouled Aptidon, imposed an authoritarian one-party state which gave advantage to one of the two main ethnic groups, the Issa. The tensions exacerbated led ultimately to civil war in the 1990s, until a power-sharing peace deal was brokered in 1994. Ismael Omar Guelleh has been president since 1999.
Where has the debt come from?
From the mid-1980s Djibouti’s economy stagnated and the civil war from 1991-1994 had catastrophic consequences for the economy, imposing a heavy cost on the budget. War in neighbouring countries led to a large influx of refugees, putting an extra burden on already stretched public services. Waning donor support compounded the impact of these events, leading to a build-up of Government arrears of some 30% of GDP by 2000.
Djibouti’s external debt amounts to 55% of its national income and the money it spends servicing its debt is urgently needed to tackle poverty. Djibouti has some of the highest rates of illiteracy, morbidity, and maternal and infant mortality in the developing world. The unemployment rate is close to 56% and 42% of the population lived on less than US$2 a day.
Debt cancellation status
Djibouti is officially classed as a lower middle-income country by the World Bank. It is therefore not eligible for the Heavily Indebted Poor Countries initiative or the Multilateral Debt Relief Initiative. Nor is it eligible for additional debt relief from the UK or other bilateral donors. This is regardless of the size of its external debt in comparison to the value of exports, its domestic debt or what Djibouti needs to spend on tackling poverty.
The New Economics Foundation calculates that Djibouti requires 52% debt cancellation in order for the government to meet the basic needs of its citizens, such as health, education and infrastructure, without taxing those living below an ethical poverty line of $3 a day.
Sources of information:
World Bank, BBC
Last updated: April 2008
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