Make aid work - and drop the debt!
In Accra, the capital of Ghana, over 1,000 officials from donor and developing countries will meet from 2nd to 4th September 2008 to report back on progress made against aid targets set in Paris in 2005, and to endorse a new Accra Agenda for Action on aid. Politicians made high level promises to make aid better for poor people at the last forum in Paris, but lack of progress on these commitments means their credibility is now at stake.
The UK and other rich country governments have a responsibility to ensure that concrete actions are agreed in Accra which ensure aid is effective in meeting the needs of those for whom it is intended.
Beyond this, Jubilee Debt Campaign and our colleagues in the global debt movement are also gravely concerned that the debt issue is largely absent from the discussion about aid effectiveness. We endorse the statement by Jubilee South which highlights this concern.
The current international debt relief initiatives have not resolved the problem of debt. Too few countries have received too little debt cancellation. Meanwhile new debts are being accumulated. Even the best-intentioned aid cannot be effective as long as many countries from Africa, Latin America and the Caribbean, Asia and the Pacific continue to lose huge amounts of much needed resources to debt servicing.
Moreover, a major part of what rich countries count as aid is actually given in the form of loans, which add to the already huge debt stocks claimed from many countries in the South. For example, only 9% of World Bank funding for poor countries in 2007 was given in the form of grants - the rest was loans.
While many of these loans are either interest-free, have interest rates below the market level or come with a grace period, they nevertheless increase the amount of money the countries of the South have to send out of the country paying off their debts. Aid should be given as grants, not loans, so that the debt burdens of poor countries are not increased.
Because of Accra’s limited agenda, it is important to see this meeting in the wider context of international attention this autumn on the challenges of world poverty. The UN summit on 25 September will discuss progress in achieving the Millennium Development Goals, followed by Global Debt Week and the Stand Up and Act mobilisation in October, and the UN Financing for Development conference at the end of November. This UN meeting will address debt, as well as issues such as trade, taxation, reform of the financial institutions, and aid – in other words many of the areas of global finance that need to be reformed if poverty is really going to be tackled.
