Tsunami debt relief must be first of many in 2005

Social justice news
January 2005

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Tsunami debt relief must be first of many in 2005
UN launches appeal for tsunami victims

Tsunami debt relief must be first of many in 2005
In a statement released January 4, the United Kingdom's Catholic Agency for Overseas Development (CAFOD) "welcomed" the initiative of the UK Chancellor Gordon Brown to suspend debt service payments of countries affected by the Indian Ocean tsunami. The main beneficiaries of the payment suspension will be the worst hit countries, Indonesia and Sri Lanka, which will have reconstruction bills rising into billions of dollars, according to CAFOD.

The chancellor said the plan would initially save the most affected countries about £1.58 billion in repayments.

CAFOD's Head of Public Policy George Gelber said, "2004 ended with the worst natural disaster of modern times. 2005 has begun with an avalanche of generosity and compassion from private citizens. We hope that this can be maintained throughout a year in which we intend to make poverty history."

CAFOD believes that the debt moratorium should be converted into debt cancellation for the Asian countries affected by the Tsunami. But this should not come at the expense of debt relief for other poor countries around the globe who are crushed by the burden off unpayable debt.

Although world leaders promised $100 billion in 1999 at the G8 Summit in Cologne, only $31 billion has been delivered to date. The scheme for debt relief for poor countries is so flawed that many countries are worse off than before, according to CAFOD.

Over a half of the Heavily Indebted Poor Countries (or HIPCs) spend 15 percent of their government revenue on debt servicing. It means in Zambia, the government can't afford to pay schoolteachers enough to survive.

CAFOD argues that in 2005 the G8 must come up with a new framework for debt relief based on a poor country's ability to meet the Millennium Development Goals. Under this regime, almost all HIPCs and some other poor countries like Nigeria would require total debt cancellation and additional aid.

Gelber said, "The British government and other G8 governments will not just be judged on whether they get debt relief for victims of the Tsunami, but if they get debt cancellation for everybody who deserves it."

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