The Good, the Bad and the Ugly - one year on briefing
26 June 2006
The main points of the briefing are: THE GOOD Some debt cancelled
- A total of $36 billion of multilateral debt is being cancelled across 21 countries in 2006. This could rise to as much as $50 billion across 42 countries if others qualify.
- Countries like Zambia, Tanzania and Ghana are already benefiting from the cancellation. Zambia's new budget includes money to employ 4,500 new teachers, and abolishes fees for rural healthcare.
- The cancellation of 100% of some debts is a significant step. Rather than granting debt 'relief' so that countries can carry on paying, politicians have accepted, at least in principle, that full cancellation is needed.
- The deal does NOT deliver 100% debt cancellation, as some have claimed. It cancels some of the debts of some of the countries that need cancellation - but there's a long way to go before the debt crisis is over.
- Many countries that need debt cancellation, like Kenya and Indonesia, are not covered by the deal, as it is linked to the discredited HIPC initiative. Research shows that 107 countries need some form of debt cancellation just to meet their people's basic needs - but this deal covers a maximum of 42.
- The deal excludes important creditors like the Inter-American Development Bank and the Asian Development Bank, and takes no account of the legitimacy of debts. At most, 10% of the $500bn in poor country debts will be cancelled as a result of the deal.
- The World Bank saved itself $5bn after the G8 by excluding debts from 2004 from the deal. It also tried to make countries wait 15 months to receive debt cancellation - but campaigners forced this down to 3.
- Debt cancellation is still linked to harmful and anti-democratic economic policy conditions - like privatising services, cutting public spending and opening infant industries to competition. These strings should be cut - find out more here.