Africa

‘Odious debt’ recognized by British Parliament

House of Commons International Development Committee

July 14, 2008

Debt Relief, 3rd Report 1997-1998, London: House of Commons The
British House of Commons International Development Committee recognizes
the concept of odious debt. Relevant passages from the Committee’s
report on debt relief: The causes of unsustainable debt [PDF] :

David
Woodward, a development consultant, reminded us in evidence that in
some cases the responsibility for unproductive use of loans lay with
previous rather than current debtor governments. For example, the bulk
of Rwanda’s external debt was incurred by the genocidal regime which
preceded the current administration. In 1980, Rwanda’s total long-term
external debt was US$190 million; by 1995, this had increased to US$948
million. Some argue that loans were used by the genocidal regime to
purchase weapons, and that the current administration, and ultimately
the people of Rwanda, should not have to repay these “odious” debts.

Rwanda [PDF] :

Rwanda
is one of the three poorest countries in the world, with 45.7 per cent
of the population living below US$1 a day, and a GNP per capita of only
US$180, compared to US$18,700 in the UK. Rwanda owes external debt
equivalent to 84 per cent of its GDP: about US$1 billion, including
US$99 million arrears. 84 per cent of this debt is owed to multilateral
creditors, comprising 55 per cent owed to the World Bank, 25 per cent
to the African Development Bank, and 4 per cent to other multilateral
creditors. The remaining 16 per cent of Rwanda’s external debt is owed
to bilateral creditors, 8 per cent being owed to France. Rwanda’s net
present value of debt to exports ratio is 550 per cent, and it is
expected that by 2000 this will have escalated to 732 per cent, with a
debt service to exports ratio of 54 per cent. This is clearly a
situation which requires urgent and deep relief. We are concerned that
debt relief for Rwanda must be provided as rapidly as possible, in
order to make a real contribution to Rwanda’s economic recovery. This
is vital if the projected NPV/exports ratio of 732 per cent is not to
become a reality. We urge the Government to insist that
multilateral debt relief for Rwanda be implemented as rapidly as
possible. We further recommend that the Government urge all bilateral
creditors, in particular France, to cancel debt incurred by the
previous regime.

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