Debt relief leaving the poor worse off, says Oxfam

Charlotte Denny
The Guardian (UK)
August 21, 2000

International efforts to cut the debts of the world’s poorest countries are leaving some paying tens of millions of dollars more to their western creditors, Oxfam said today.

The aid agency described the debt relief package which the World Bank and International Monetary Fund are offering Zambia, one of the most impoverished countries in Africa, as a “fraud”.

Confidential papers from the IMF obtained by Oxfam show that Zambia’s interest payments are set to rise from $136m (£91m) in 1999 to $235m in 2002, even though it is expected to enter the west’s official debt relief programme in October this year. The increase is due to payments falling due on a large IMF loan.

Oxfam has called for the fund to write off all the money owed to it by Zambia over the next few years, instead of offering the country limited debt relief. “The ultimate yardstick for measuring debt sustainability must be human need, rather than abstract financial indicators during creditor horse trading,” David Bryer, Oxfam’s director, said.

The agency’s plea came as it was revealed that Horst Köhler, the new head of the IMF, and Jim Wolfensohn, the president of the World Bank, are to hold an urgent meeting this week to discuss debt, after the failure of last month’s summit in Okinawa of the group of eight industrialised countries to agree a more generous relief package.

Leaders from five indebted countries are also meeting this week in London for a debt relief summit, convened by the Nigerian president, Olusegun Obasanjo. Announcing the meeting Mr Obasanjo, the leader of the group of 77 developing nations, said poor countries were disappointed by the G8’s inaction at Okinawa.

Debt campaigners have slammed the slow progress of the World Bank and IMF’s heavily indebted poor countries initiative since western leaders promised in June last year that 25 countries would benefit from debt relief by the end of 2000, and that $100bn in third world debt would eventually be written off. With four months to go to the deadline, only nine countries have formally qualified for debt relief and none has received any debt cancellation.

Oxfam said the Zambian case showed that the initiative was failing, not just because it was too slow but because the amount of relief on offer was inadequate, leaving most countries still spending more on interest payments than on health or education.

Zambia has one of the world’s worst health records – life expectancy is falling and child malnutrition rising – but by 2002 it will be spending twice as much paying back western creditors as it will on basic health care.

“For a country whose human development indicators are deteriorating as rapidly as Zambia’s, this is devastating,” said Kevin Watkins, senior policy adviser at Oxfam.

Oxfam’s figures show that in six African countries – Mali, Burkino Faso, Tanzania, Mozambique, Zambia and Malawi – debt payments will outstrip spending on basic education even after the countries have graduated from the debt relief programme.

Categories: Africa, Odious Debts, Zambia

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