Letter from Tanzania

Letter from Tanzanian Civil Society Organisations to Canadian and German Embassies in Tanzania

18th January 2005

The unpayable multilateral debts of poor countries must be cancelled

The 52 poorest and most indebted countries of the world are struggling with the burden of $375 billion of debt. Every day, these countries make more than $50 million in debt repayments. A large part of this debt dates from inappropriate multilateral loans in the 1960s and 1970s that had no sustained benefits. More people are poor, and living in extreme poverty, than thirty years ago; but each citizen of these impoverished countries now pays more to service international debt.

HIPC debt relief has helped 66% more children in Tanzania to attend school; but it is unacceptable that in Tanzania and many other countries, more people are without access to basic health care now than 20 years ago. In 2004, $130 million of Tanzania’s budget went to service debt – equivalent to most of the health budget. In 2006/7 Tanzania will have to spend $82 million to repay its multilateral debt - compared with $45 million in 2003/4. Of this yearly repayment, Canada’s share is US$3 million / Germany’s share is US$8.2 million. The Government of Malawi spends more on debt servicing than on health care. In the era of HIV/AIDS and rampant malaria, this imbalance should not be tolerated.

Bold actions are needed, very quickly, in order to tackle the levels of poverty that exist – so outrageously – at the start of the 21st century and to come anywhere close to achieving the Millennium Development Goals. These must include a massive increase in funding for the basic services essential to people’s development and welfare. The scale of financial risk involved is minor in comparison with the scale of inequity inherent in the current level of financial commitment by rich countries.

As a coalition of civil society groups pressing for action to achieve the Millennium Goals in Tanzania, we are concerned that HIPC has been too slow and exclusive and the G8’s promise of to cancel $100 billion of debt is not enough even to meet existing pledges. We call on the Government of Canada, to support the rapid and full cancellation of unpayable multilateral debts of the 52 poorest and most indebted countries, including Tanzania. This should be done without diverting aid budgets, e.g. by revaluation or sale of IMF gold reserves, and without imposing cumbersome and often harmful economic conditions. We look to Mr Ralph Goodale, the Finance Minister of Canada to come out clearly in favour of wide and transparent debt cancellation in the G7 meeting next month.

With all good wishes.

Yours sincerely,

Mary J. Mwingira
Tanzanian CSOs’ MDGs Campaign Coordinator