|
Get AfricaFocus Bulletin by e-mail!
Print this page
|
Note: This document is from the archive of the Africa Policy E-Journal, published
by the Africa Policy Information Center (APIC) from 1995 to 2001 and by Africa Action
from 2001 to 2003. APIC was merged into Africa Action in 2001. Please note that many outdated links in this archived
document may not work.
|
Africa: Debt Update
Africa: Debt Update
Date distributed (ymd): 000712
Document reposted by APIC
+++++++++++++++++++++Document Profile+++++++++++++++++++++
Region: Continent-Wide
Issue Areas: +economy/development+
Summary Contents:
This posting contains a listing of events for the Africa day of
action on debt (July 15, 2000), provided by Jubilee 2000 in London.
The actions precede the opening of the G-7 Summit in Okinawa,
Japan, on July 21-23. Debt cancellation campaigners around the
world are calling on the G-7 leaders to cancel the debt, but there
are serious doubts whether the creditor countries will even fulfill
the commitments made at their summit in Germany last year.
The Wall Street Journal, on July 10, reported that "the effort is
in danger of collapsing because Congress hasn't paid the U.S. share
of the tab." The House and the Senate are currently discussing
budgetary allocations of between $69 million and $75 million for
fiscal year 2001, far less than the $435 million requested by
President Clinton. (For suggested actions see
http://www.africafocus.org/docs00/debt0006.php>
and
http://www.j2000usa.org/action/july.html
The official web site for the summit is at:
http://www.g8kyushu-okinawa.go.jp/e
In a latter to the summit leaders released on July 11, UN
Secretary-General Kofi Annan called for cancellation of the debts
of all highly indebted poor countries in return for demonstrable
commitment to poverty reduction. He noted that only five countries
had so far qualified for relief, and only 35% of their debts had
been cancelled. Yet 40% of Africa's government revenues were
directed towards servicing a total debt of $350 billion.
You can add your voice to demands that the debt be cancelled, by
sending an e-mail message to the summit leaders, at
g7leaders@dropthedebt.org. For more background see
http://www.dropthedebt.org
This posting also contains the abstract of a new paper on the
Heavily Indebted Poor Countries (HIPC) debt relief initiate,
prepared by the U.S. Government Accounting Office, as well as a
summary of that same paper by the European Network on Debt and
Development (Eurodad). The report concludes that current
initiatives are "not likely to provide recipients with a lasting
exit from their debt problems, unless they achieve strong,
sustained economic growth." It also notes that both bilateral and
multilateral creditors are "having difficulty securing their share
of the necessary financing" for existing commitments.
+++++++++++++++++end profile++++++++++++++++++++++++++++++
Africa holds a day of action on debt, 15 July 2000
Jubilee2000 UK
http://www.jubilee2000uk.org
Take part and support the campaign actions across Africa. Send a
message of solidarity.
UGANDA Debt Rally and procession through Kampala. Exhibition
covering the Ugandan debt experience (Kampala). (contact Ann Kamya,
Uganda Debt Network. Tel: 256 41 543 972 email: udn@infocom.co.ug)
NIGERIA Drop the Debt Concert at Lekke Beach, Lagos . Starts at
1pm. This concert will feature the king of Juju music, King Sunny
Ade and an array of stars including; Sonny Okosun, Onyeka Onwemni,
Oliver De Coque, reggae icon, Daddy Shokey, and Dele Taiwo.
There will be speakers from Pro democracy and civil society
organisations and cultural groups from all over the country. The
event will be broadcast live on NTA television and Rhythm FM,
Lagos. There will be phone link to the Bangladeshi Debt concert in
London. (see London)
For more information, see Nigeria press and TV or contact Skidd
Ikemefuna tel/fax 014932641 ext. 1039 email skidd@rcl.nig.com )
Jubilee 2000 Nigeria Coalition will be picketing embassies of the
G8 in Lagos on 13 July. Contact National Secretariat, Jubilee 2000
Nigeria Coalition for more details. Tel 234 1 52 258748 email.
Aneej@rcl.nig.com
SOUTH AFRICA Press statement by Jubilee 2000 South Africa (contact
Neville Gabriel tel; 27 21 685 1565 Fax: 27 21 685 1645 email:
aidc@iafrica.com)
CAMEROON Press statement by Jubilee 2000 Cameroon. (contact
Georgine Kegne Djeutane, tel: 237 31 20 05 fax: 237 31 20 06 email:
peace.humanus@camnet.cm )
CONGO KINSHASA Press Statement (contact Madame Chirume, e-mail:
caid_kivu@compuserve.com)
GHANA Debt concert by the Indigenafrika Youth Ensemble and Nii
Noi's African Jazz Project at the National Theatre in Accra.
(For more information, contact Afari, Director, National Theatre on
23321663449 and Yao Graham, Third World Network, tel 23321 1511189
email: twnafrica@ghana.com)
There will also be a World Christian Council Debt Conference in
Accra from 23 July to 29 July. Delegates from 36 African countries
are scheduled to attend. (for more information contact Modeste
Mfashawanyo. Email: wscf@insightkenya.com )
MALAWI Malawi Jubilee 2000 Debt Coalition is organising the
following post action day events; 21 July - Debt Music Concert at
Lilongwe on 21 July 22 July - Round Table conference at Ryalis
Hotel, Blantyre City. 22 July - Press conference and round table
discussion in Chimezwe. (contact Francis Ng'ambi, Jubilee 2000,
Malawi . Tel: 265 743 591 Fax: 265 743 606 email:
fngambi@hotmail.com)
MALI Launch of the Debt cassette by Jah Issouh at Islamic Centre,
Bamako Demonstrations will also be held at the embassies of the G7
in Bamako on 22 July. (for more information contact Sekou Diarra
Tel: 223 21 59 49 Fax: 223 21 55 78 email: aidchrist@malinet.ml)
KENYA Campaign manifestations in six towns including Lari, Muranya
and Laikipia. There will be drama performances, prayer meetings and
music. 14 July - Human chain around Nairobi, starting from Machakos
Bus stop and procession. (contact Margaret Githrndu, The Greenbelt
Movement and Inter Faith Debt Committee. tel 254 2 571523 email:
gbm@iconnect.co.ke)
MADAGASCAR Launch of Jubilee 2000 and campaigners Conference
(contact Hemsing Hurrynag, DION, Tel: 230 433 0107 fax: 230 670
0170 email: dionet@intnet.mu )
SENEGAL Press statement by Dakar 2000 (contact Demba Dembele, Dakar
2000 Tel 221 825 65 73 Fax: 221 824 44 13 )
ZAMBIA Press statement by Jubilee 2000 Zambia
(contact Chrispin Mphuka, Jubilee 2000 Zambia tel: 260 1 290 410;
fax: 260 1 290 759 email: debtjctr@zamnet.org.zm)
LONDON Bangladeshi Link Debt Network Concert at SCALA, Kings Cross.
This concert features Rizwan Mauzzam Qawali (Real World Records),
State of Bengal, and T-power & Soto, with a Special Guest
appearance by Sanjeev Bhaskar (Goodness gracious Me). Kings Cross,
275 Pentonville Road, London, N1. Doors open 9pm. (contact Scala
Hotline 0207 833 2022, Purple Banana Infoline 07930 869895)
There are also the following talks;
The Debt crisis in Africa, by Kwesi Owusu of Jubilee 2000 Africa
Initiative on 11 July at Institute For African Alternatives,
Lindhurst Hall, Warden Road, London, NW5 4RE. Time: 6pm-8pm
(contact Dr Mohammed Sulliman, Tel: 0207 482 4660 , fax: 0207 482
4662, e-mail: ifaanet@gn.apc.org)
Debt Management and poverty alleviation in Africa; issues and
perspectives, with Kwesi Owusu, Dr. Machiko Nissanke, School of
African and Oriental Studies and Karl Ziegler, Centre for
Accountability and Debt Relief. 12 July, at The Africa Centre, 38
King Street, Covent Garden, London, WC2E 8JT. Time:7 pm,
(contact Astrid Sagebiel, Tel: 0207 836 1973, Fax: 0207 836 1975)
Developing Countries: Debt Relief Initiative for Poor Countries
Faces Challenges (Chapter Report, 06/29/2000, GAO/NSIAD-00-161).
(full text available, in PDF, at http://www.gao.gov)
Pursuant to a congressional request, GAO: (1) assessed whether the
enhanced Heavily Indebted Poor Countries Initiative (HIPC) is
likely to free up resources for poverty reduction and achieve the
goal of debt sustainability; (2) described the strategy to
strengthen the link between debt relief and poverty reduction and
how this strategy is to be implemented; and (3) described the
challenges creditors face in fully funding the enhanced initiative.
GAO noted that:
(1) the enhanced HIPC initiative will provide debt relief to
recipient countries;
(2) however, given the continued fragility of these countries, the
initiative is not likely to provide recipients with a lasting exit
from their debt problems, unless they achieve strong, sustained
economic growth;
(3) the decline in debt service will only free up resources for
additional poverty reduction if countries continue to borrow at the
same level and concessional terms as in the years just prior to
their qualifying for debt relief;
(4) this occurs because countries previously borrowed for several
reasons including debt payments, and they will need to continue
borrowing after receiving debt relief in order to meet their
remaining debt payments and to increase spending on poverty
reduction;
(5) debt relief under the initiative is linked to recipient
countries' preparation of a poverty reduction strategy;
(6) linking debt relief and poverty reduction creates tension
between quick debt relief and preparing such strategies;
(7) many actions are required to prepare and implement a strategy,
including gaining the support of key stakeholders, such as
political leaders with the power to affect change, and collecting
and analyzing necessary data, such as data on the extent and major
causes of poverty;
(8) however, weaknesses in countries' ability to collect and
analyze these data and other challenges may limit these efforts;
(9) the desire to receive debt relief quickly may cause some
countries to quickly prepare the strategies, which could diminish
the strategies' quality, or the level of civil society
participation;
(10) the World Bank, the International Monetary Fund, and the U.S.
Treasury said that these concerns are mitigated because some
countries do not have to prepare a full strategy in order to
qualify for debt relief;
(11) financing the initiative has proven to be a challenge for many
creditors, with some multilateral and smaller bilateral creditors
reporting that they are facing difficulties in providing their full
share of debt relief and need external funding;
(12) for multilateral and smaller bilateral creditors, difficulties
in financing their shares stem from legal, technical, and financial
restrictions; and
(13) difficulties in fully financing the initiative could undermine
the success of the initiative, since debt relief is supposed to be
additional to the assistance that donors and creditors would
otherwise provide to low-income countries.
European Network on Debt and Development
http://www.oneworld.org/eurodad
info@eurodad.ngonet.be
GAO report on the HIPC Initiative
July 3, 2000
The US General Accounting Office has just released a report
analysing the enhanced HIPC Initiative, commissioned by the US
Congress. "Developing Countries - Debt Relief Initiative for Poor
Countries Faces Challenges". The report number is GAO/NSIAD-00-161
and can be found at www.gao.gov. You will need Adobe Acrobat to
read it.
As part of the US civil service machinery, the GAO's report is
impartial and objective. Due to the highly politicised nature of
the topics covered, however, the report falls short of making
explicit policy recommendations. Nonetheless, it does make several
important assessments on each of three topics:
- Whether the enhanced HIPC is likely to free up resources for
poverty reduction
- The linkages between debt relief and poverty reduction, through
the PRSP (Poverty Reduction Strategy Paper)
- The problems in financing the initiative
- Enhanced HIPC Initiative and resources for poverty reduction
The main observation made is that the enhanced HIPC Initiative is
unlikely to provide recipients with a lasting exit from their debt
problems, unless they achieve strong and sustained economic
growth.
The basis for this observation is that the assumption that
countries will, after having received HIPC debt relief, continue to
borrow in the same fashion as beforehand, in order to allow the
'freed up' resource from debt relief to be used for poverty
reduction efforts.
Continuing with existing borrowing patterns implies, however, a
future build up of debt. Countries will only be able to pay off
these future liabilities - and thus permanently exit their debt
problems - if they achieve consistently strong economic growth.
But the report then suggests that World Bank and IMF projections of
strong sustained economic growth for the HIPCs may be optimistic,
given vulnerability to external shocks, such as volatility in
commodity prices. For example, the Bank and Fund projections for
Honduras, Nicaragua, Tanzania and Uganda are for export earnings
growth of at least 9.1% per year on average for over twenty years.
The GAO report suggests that sustaining such growth levels
consistently over 20 years may be difficult.
If this is the case, the report then concludes, then the amount of
revenue generated through economic growth will be reduced.
This could have one of several impacts. Countries may then require
further loans to help pay off old loans, further debt cancellation,
or may fall into arrears.
Another alternative would be to adjust to the lower level of export
earnings by reducing imports, lowering domestic spending, and
raising tax revenues (or a combination of these); however, the
report points out that these action in their own right would
probably further reduce economic growth rates and further poverty
reduction expenditures.
Eurodad Comment: this analysis is neither new nor controversial,
but it does throw put the spotlight onto a subject that has
hitherto received little attention: that HIPCs will only be able to
'free up' resources for poverty is they continue to borrow at the
same rate as they have in the past. If a country chose to reduce
its volume of net borrowing by the same amount as debt relief
received through the HIPC Initiative, then no resources would be
freed up.
There are essentially four factors that determine what the 'poverty
dividend' from the HIPC Initiative will be for any country. These
are:
(1) the amount of debt relief granted
(2) the future economic growth rate
(3) the future level of borrowing
(4) future government policies (e.g. levels of expenditure on
poverty reduction)
Currently, the Bank and Fund assume that future economic growth
rate and future level of borrowing will remain as predicted. As a
result, future levels of government expenditure on poverty
reduction can be increased by the same amount as the reduction in
debt servicing levels following debt relief.
But other scenarios are possible. As the GAO report points out, if
economic
growth rate is not maintained at the high rates predicted (and, for
example, recent projections of the incremental economic impact of
AIDS in Africa might be one of several reasons), then there would
be fewer revenues for future debt servicing. One option then is to
increase the level of future borrowing. Another is to maintain
borrowing at the same rate, but to cut expenditure on poverty
reduction and other government programmes, or to raise tax rates.
Of course, the obvious other scenario is the one that the GAO
report was not allowed to detail: deeper debt relief. If more HIPC
debt is cancelled, then more of the income generated from future
economic growth can be spent on poverty reducing expenditures, or
avoiding further borrowing if economic growth rates falter. Deeper
debt relief is the unwritten conclusion of the first section of the
report.
2. Linkage between debt relief and poverty reduction
The conclusion from this section is simpler, as there are fewer
economic variables to conjure with. The report points out that many
actions are needed to reduce poverty, given its high incidence and
its numerous and diverse causes. As a result, a successful poverty
strategy has to include many factors: good economic policies, good
governance, participation, measures targeted at the specific causes
of poverty and so forth. Preparing poverty strategy is as a result
time-consuming and resource-heavy. There is thus a tension between
the time taken to draw up a successful PRSP and the desire for
rapid debt relief. The report summarises some of the arguments on
both sides for whether or not the interim PRSP is an adequate
solution to this problem, but concludes that as long the HIPC
Initiative links debt relief to PRSPs, this tension is likely to
continue.
This conclusion thus adds a degree of backing to those who question
the current umbilical linkage between the HIPC Initiative and the
PRSP.
3. Problems in financing the initiative
This section of the report simply points out that many
multilaterals and smaller bilateral creditors are having problems
financing their contributions to the HIPC Initiative. It notes
that the larger bilateral creditors are key to the success of the
Initiative, but that they too face challenges in ensuring that debt
relief is additional to debt relief (see previous Eurodad mailing),
and in making contributions to help multilaterals. It concludes by
saying that these difficulties could undermine the success of the
Initiative, as debt relief is supposed to be additional to other
development assistance.
The report also has useful sections summarising how G-7 countries
account and report for their debt relief, including examples of
how the economic value of old loans is calculated.
(ends)
This material is being reposted for wider distribution by the
Africa Policy Information Center (APIC). APIC provides
accessible information and analysis in order to promote U.S.
and international policies toward Africa that advance economic,
political and social justice and the full spectrum of human rights.
|
