Rich countries fail tsunami victims on debt
Rich countries meeting in Paris today are failing to take the bold steps needed on debt, said international agency Oxfam today. Rather than agreeing to cancel significant proportions of debt, they seem set to go for the easy option of a temporary suspension of repayments, which will then be reapplied in a few months.
This temporary rescheduling of payments means that it is likely that interest will continue to be charged and the debt repayments will have grown when the tsunami-hit countries have to start paying the debts back.
"We hoped that rich countries would make an exceptional move today and agree to cancel significant proportions of debt for those countries devastated by the tsunami.
Sadly they have failed the tsunami victims by refusing to take bold steps. Instead of ensuring the tsunami becomes a turning point out of poverty for the region, rich countries seem set to rebuild the poverty of the past. The public will be rightly outraged that their generosity is being undermined by rich country governments' stubbornness.
The tsunami has highlighted the pernicious impact of debt on poor countries. Debt repayments contribute to global poverty that kills the equivalent of this tsunami every week.
It is time that that rich countries shifted their priorities and put people before debt repayments and gave not just the tsunami-hit countries, but also the world's poorest countries a fair chance to work their way out of poverty," said Phil Bloomer, Oxfam's Head of Advocacy.
Oxfam is arguing for an independent and transparent assessment of what
constitutes a 'sustainable' debt burden for the tsunami affected countries and debt above this level cancelled. Any cancellation should only have one condition; that it is spent transparently on poverty reduction and reconstruction.
These debts are massive, to give an idea of the scale of these repayments:
- With just one day's debt repayments Indonesia could instead afford 100
desperately needed aid flights. With a months debt repayments they could pay for three thousand flights.
- India could help provide 18 million people with emergency clean drinking water with just one day's repayments.
Any decision to relieve the debt burden of those effected by the tsunami should be linked to a broader deal on further debt relief for the poorest countries to be agreed at the G7 finance ministers meeting in early February.
- In 2002 Indonesia, Thailand, Sri Lanka and India together paid $50 billion in debt service. Of this $7 billion went to rich country governments such as the Japan, UK and the US. Indonesia owes Britain $644 million dollars, 44% of which was as a result of arms sales. By far the biggest creditor for Indonesia is Japan, owed $29 billion.Indonesia's debt payments for 2004 are 10 times more than spending on health and 33 times more than spending on housing.
- A debt moratorium for two years was agreed following the devastating Hurricane Mitch in 1999 and after the floods in Mozambique in 2000, under pressure from campaigners globally. However, a moratorium will only postpone the problem, and does nothing to tackle the root cause.
- The poorest countries pay $100 million dollars a day back to rich countries in debt repayments, vital resources that can be used for development and poverty reduction.
For further information, please contact Contact: Brendan Cox
Oxfam Media Unit - Tel: 44 (0) 1865 312289 - Mobile: 44 (0) 7957 120 853