Jubilee USA to G8: Don't delay debt cancellation!

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February 2006

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Jubilee USA to G8: Don't delay debt cancellation!
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Jubilee USA to G8: Don't delay debt cancellation!
WASHINGTON—The Group of 8 (G-8) Finance Ministers meet in Moscow on February 10. On their agenda: implementation of last year's impoverished country debt cancellation deal, energy security, and avian flu on their agenda. Jubilee USA Network urges U.S. Treasury Secretary John Snow and other ministers present to address deadly delays to debt cancellation proposed by the World Bank.

"The credibility of G-8 Finance Ministers is at stake this weekend in Moscow. They talked about a deal to cancel debts of up to 38 countries last summer, but under the proposal currently being considered by the World Bank, fewer than half of these nations will see any relief two full years after the agreement, and they'll have to foot the bill," said Debayani Kar, spokesperson for Jubilee USA Network. "Impoverished people will pay the costs of this delay in lost lives, denied health care, and education. G-8 ministers meeting this weekend must put an end to these deadly delays," she said.

The World Bank Executive Board will meet in February and March to implement debt cancellation for those impoverished countries made eligible under the terms of the July 2005 G-8 debt agreement, now called the Multilateral Debt Relief Initiative (MDRI). This follows the IMF Board’s approval of debt cancellation for 19 impoverished countries this past December. There are three key issues that G-8 Ministers, representing leading shareholders at the World Bank, must address:

• The Bank is proposing what amounts to a 15-month delay for any additional countries to receive cancellation beyond an initial 17 nations. This new approach will mean that countries that already qualify for the debt relief program—such as Burundi, Cameroon, Guinea, Malawi, and Sierra Leone, many of which are heavily burdened by HIV/AIDS—will now have to wait until July 2007 at the earliest for debt cancellation—a full two years after the G-8 summit was held in Gleneagles.

• While IMF debt cancellation provided cancellation of all debts through end-2004, the World Bank proposal would only cover debts until end-2003. For nations like Cameroon and Malawi, combined with the delays they face, this will mean even after "100 percnt debt cancellation" to the World Bank, they will owe millions in debts to the World Bank between 2004 and 2007.

• Far too few countries get debt cancellation under the current program. In April, the World Bank proposes to add 4 new countries to the HIPC Initiative—Haiti, Eritrea, Kyrgyz Republic, and Nepal. But these nations—including Haiti, the Western Hemisphere’s poorest nation—will face interminable delays and in the case of Haiti will not see actual debt cancellation until December 2009 because of the harmful economic conditions attached to qualification for debt relief. Moreover, the fact that the World Bank proposes to add only 4 nations, again demonstrates the utter inadequacy of the HIPC framework. The UK government and leading international charities have identified at least 60-70 countries that would need 100 percent debt cancellation to meet the Millennium Development Goals and many more nations require cancellation of odious and illegitimate debts. The HIPC approach is clearly inadequate.

At the G-8 Ministers meeting, debt will be discussed alongside a focus on energy security. Jubilee USA underscores the connection between increased oil production in impoverished countries and increased debt burdens resulting from new loans for production, which fuels climate change and local environmental degradation. Jubilee USA intends to continue to highlight the links between debt, oil, poverty, and climate change, and the need for a shift to renewable, clean energy in the coming months.

"Debt relief and energy security are both fundamentally threatened by rising oil prices and our ongoing addiction to oil. Freedom from debt ultimately means freedom from oil," said Steve Kretzmann, Executive Director of Oil Change International, a member organization of Jubilee USA Network.

Jubilee USA Network is the US arm of the international movement working for debt cancellation for impoverished nations. Jubilee USA is a network of over 75 religious denominations and faith-based group, labor groups, environmental organizations, and community and advocacy groups working for freedom from debt and economic justice for countries in Africa, Asia, and Latin America.

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