wfn.org | LWF General Secretary Calls for Extension of Debt Relief

["Frank Imhoff" <Frank.Imhoff@elca.org>]

LWF General Secretary Calls for Extension of Debt Relief Program as
Agreed upon by G8 Member Countries
Debt Cancellation Initiative a Significant Breakthrough, but Not Yet a
Solution

GENEVA, 5 July 2005 (LWI) * The General Secretary of the Lutheran World
Federation (LWF) and Convenor of Inter-Faith Action for Peace in Africa
(IFAPA), Rev. Dr Ishmael Noko, has called on the British Chancellor of
the Exchequer, Gordon Brown, to take steps to extend even further the
debt relief program for poor countries announced last month. The
agreement was reached in the lead up to the next Group of Eight (G8)
Summit due to start on July 6 at Gleneagles, Scotland, chaired by the
United Kingdom. In a letter to the British Chancellor, Noko calls the
new debt cancellation initiative "a significant breakthrough," but "not
yet a solution." He encourages Brown to stay committed to the debt
cancellation process. "If the momentum which it has created can be built
upon and the wider dimensions of the problem addressed, a more complete
and sustainable resolution of the debt crisis may yet be within reach,"
Noko says.

In June, the finance ministers from the world's wealthiest nations,
Canada, France, Germany, Italy, Japan, Russia, the United Kingdom, and
United States of America, agreed on canceling 100 percent of the debt,
worth USD 40 billion, owed to the major international financial
institutions by 18 of the world's poorest countries. The countries
immediately benefiting from the debt relief are Benin, Bolivia, Burkina
Faso, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mauritania,
Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania, Uganda and
Zambia. All of them have completed the Heavily Indebted Poor Countries
program (HIPC), which is based on criteria laid down by the World Bank
and the International Monetary Fund. Launched in 1996 as a first
comprehensive approach to reducing the external debt of the poorest
countries, the program was reviewed three years later, and enhanced to
provide deeper debt relief. 

Noko points out that there are many other countries, some of which are
excluded from the HIPC altogether, requiring cancellation of their
multilateral debts in order to have at least a chance of achieving their
Millennium Development Goals. "All of the countries that need debt
cancellation should receive it," he states. 

Noko stresses that all of the unsustainable and/or illegitimate debts of
these countries should be cancelled. He expresses his concern for poor
Latin American countries, many of which "owe more to the Inter-American
Development Bank (IADB) than to other international institutions.
However, the IADB debts of the countries concerned do not appear to be
included in the agreement." He notes that the question of unsustainable
and illegitimate debts owed to private commercial entities also should
be addressed. 

Furthermore, he requests that "debt relief should be de-linked from the
adoption of economic liberalization policies." Loans and debt relief
from international financial institutions are often only granted under
conditions requiring the wholesale adoption of neoliberal economic
policies including cuts in public spending, privatization of public
utilities and services and the opening of domestic markets. The
countries concerned have become more vulnerable to domestic and
international economic volatility, Noko notes. He deplores the fact that
"the new debt cancellation agreement is predicated on the HIPC process,
which continues to require the adoption of such policies as a condition
for debt relief." 

Noko also strongly emphasizes the question of legitimacy, and criticizes
the fact that "the new debt cancellation agreement is still founded on
the calculation of how much a country can afford to pay, and does not
consider the legitimacy of the debts." He demands the establishment of
independent mechanisms for the prevention and just resolution of future
debt crises. These mechanisms are needed for testing the legitimacy of
debts before they are contracted, and for "mediating and resolving debt
difficulties before they become humanitarian emergencies," he says. (649
words)

(By Julia Heyde, youth intern in the LWF Office for Communication
Services.)

(The LWF is a global communion of Christian churches in the Lutheran
tradition. Founded in 1947 in Lund, Sweden, the LWF currently has 138
member churches in 77 countries all over the world, with a total
membership of nearly 66 million. The LWF acts on behalf of its member
churches in areas of common interest such as ecumenical and inter-faith
relations, theology, humanitarian assistance, human rights,
communication, and the various aspects of mission and development work.
Its secretariat is located in Geneva, Switzerland.)

[Lutheran World Information (LWI) is the LWF's information service.
Unless specifically noted, material presented does not represent
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