Salt of the Earth: In session

In session: legislative update
August 2000

Debt relief reaches an impasse
House pressures IMF/World Bank on 'user fees' for the world's poorest

Debt relief reaches an impasse
The Jubilee 2000 campaign is calling on U.S. citizens to meet with their members of Congress as they return to home districts during the August recess to urge them to keep debt relief for the world's poorest nations on the congressional priority list. The international movement in support of debt relief for the most heavily indebted nations in the developing world appears to have stalled after enjoying a great deal of attention from the international media and global politicians in the first half of the "jubilee" year 2000.

The lowered expectations regarding debt relief exhibited during the recent G8 meeting in Okinawa, Japan indicated a declining degree of interest in debt relief among global leaders. Dan Driscoll-Shaw, the National Coordinator of Jubilee 2000, called the G8 meeting a "significant step backward" from the enthusiasm for debt relief exhibited after the last G8 gathering in Cologne, Germany when leaders of such global industrial powerhouses as the United States, Germany, and Japan spoke of the "need" to eliminate $100 billion in debt owed by the world's poorest to the world's wealthiest nations.

"The G8 leaders claimed to be breathing new life into the debt relief process," he commented in a statement from Jubilee 2000. "But, with the process moving so slowly, the real question is who will breathe life into the 19,000 children who die every day because of the crushing debt? The G8 has offered nothing new. . . . I am outraged that halfway through this jubilee year of 2000 the G8 nations have failed to live up to debt relief promises of a year ago in Cologne and have offered instead only misleading and hypocritical statements. They refer to debt relief that should amount to $8.6 billion in net present value for nine countries as progress, while $100 billion in cancellation was promised one year ago."

Advocates say creating a U.S. debt forgiveness package for the world's Heavily Indebted Poorest Countries (HIPC) could be critical to reviving the process internationally. Driscoll-Shaw says a number of other creditor nations and institutions are closely watching the US debate and will likely follow any U.S. lead on the issue.

In July, the U.S. House of Representatives voted for a $225 million debt relief package for fiscal 2001—far below the $435 million requested by the Clinton administration—with the expectation that more debt relief will be offered in the 2002 and 2003 budget. The Senate adjourned for the summer recess without making a commitment to a debt relief package, but Driscoll-Smith is confident some kind of package is likely to be put together in September or October. The Senate appropriations committee has offered only $78 million toward debt relief. House and Senate committees will have to meet in September to reconcile the different proposals.

A new willingness in Congress to cast a colder eye on the actions and policies of the World Bank and International Monetary Fund has simultaneously slowed and complicated the debt relief campaign with some in Congress arguing that any relief should wait on the institutional reform of the IMF. While Jubilee 2000 similarly supports reform of the IMF, Driscoll-Shaw calls for relief first, reform later.

While Congress and other legislative bodies throughout the "developed world" put off a decision on debt relief, a number of nations that have given up the struggle to provide basic necessities in health, nutrition, and education continue to to pay off their national debts. It is no accident, says Driscoll-Shaw, that the global battle against HIV/AIDS has reached such a critical point that U.S. officials have begun to speak of AIDS as a national security risk when many nations are spending more per capita on debt service than on their entire per capita health budgets.—Kevin Clarke

For more information:
Jubilee 2000
Fifty years is enough

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House pressures IMF/World Bank
on 'user fees' for the world's poorest
The U.S. House of Representatives approved a measure on July 13 to pressure the International Monetary Fund (IMF) and World Bank to stop requiring that impoverished countries charge "user fees" for access to primary health services and primary education. This House action represents the first time that Congress has required the IMF and Word Bank to change the specific conditions they impose in borrowing countries.

User fees, charges imposed for using a health clinic or attending school, have led to increased illness, suffering and death when people cannot pay for health services, and decreased school enrollments when poor families can no longer afford to send their children to school. In a tragic example in Zambia quoted by UNICEF, a researcher observed a 14 year boy with acute malaria turned away from a health clinic for want of a 33 cent registration fee. According to the report, "within 2 hours, the boy was brought back dead."

The requirement that the world's most impoverished countries charge fees for primary health and education has long been one of the most controversial features of the austerity programs mandated by the IMF and World Bank. Advocates for the abolition of the fees point to scores of studies which demonstrate that their imposition forces a society's most impoverished families to deny their children basic education and their sick and dying health care. [See end of press release for examples of research findings.]

Although James Wolfensohn, President of the World Bank, has contended in addressing members of Congress that the Bank has abandoned user fee requirements, current documents, such as the program for Tanzania linked to the granting of limited debt relief, contradict his stance.

Under the provision adopted by the House, beginning in 2002, U.S. funding would be provided only when the heads of the World Bank and IMF certify their institutions "will not include user fees or service charges through 'community financing,' 'cost sharing,' 'cost recovery,' or any other mechanism for primary education or primary healthcare, including prevention and treatment efforts for AIDS, malaria, tuberculosis, and infant, child, and maternal well-being" in any of their programs.

Recent studies have revealed some of the damage done by user fees imposed by IMF/World Bank structural adjustment programs:

In Kenya, introduction of a 33 cent fee for visit to outpatient health centers led to a 52 percent reduction in outpatient visits. After the fee was suspended, visits rose 41 percent. Introduction of user fees at rural clinics in Papua New Guinea led to a decline of about 30 percent in attendance, and although it subsequently increased it never returned to pre-fee levels. Health workers also reported a reduction in completion rates for courses of treatment.

In Dar es Salaam, Tanzania the three public district hospitals saw attendance drop by 53.4 percent between the second and third quarters of 1994, when user fees were introduced.

In Nicaragua, about a quarter of primary schoolchildren have not enrolled in primary school since charges for registration and a monthly stipend were introduced. In Niger, cost recovery measures implemented as part of a structural adjustment program between 1986 and 1988 had the following results: 1) a sharp decline in already very low primary school enrollment rates: these went from 17 percent in 1978 to 28 percent in 1983 to 20 percent in 1988; 2) drop in utilization of preventative care services; 3) increased exclusion of the most impoverished from care at Niamey Hospital, where outpatients who did not pay for care would wait an average of 24 days before seeking care while an outpatient who did have to pay for care would wait an average of 51 days; and 4) exemption systems that were applied to the benefit of urban, military, and civil service families and not for the intended beneficiaries (the most impoverished).

UNICEF reports that in Malawi, the elimination of modest school fees and uniform requirements in 1994 caused primary enrollment to increase by about 50 percent virtually overnight—from 1.9 million to 2.9 million. The main beneficiaries were girls. Malawi has been able to maintain near full enrollment since that time.
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