More debt news

The initial reports emerging from this week’s meeting of G7 finance ministers were unsurprising but a little worrying for those of us eager to see the growth of momentum from the Make Poverty History rally and the World Economic Forum meeting. The US delegation seems to have refused to entertain the suggestions of a tax on (currently entirely untaxed) airline fuel to provide more funding for international development initiatives, selling of bonds, or of revaluing IMF gold reserves to provide funding for debt cancellation.

Today the Guardian is reporting that Gordon Brown has won support within the G7 for 100% cancellation of the multi-lateral debt (that owed through organisations such as the IMF, World Bank, and various regional development banks) of the countries engaged in the HIPC process. This is a huge breakthrough and one that will certainly be greeted as a victory by campaigners, though not without provisos.

There are still no speeches on this issue available at the UK Treasury website or at the website for this year’s G8 Summit in Perthshire so details of conditionality are not forthcoming, but early indications would seem to suggest that the cancellation will be within the existing HIPC process, a process which is slow, cumbersome, intent on imposing western economic models, and thus far ineffective. At their meeting in Cologne in 1999 the G8 promised $100 billion of debt cancellation and according to Jubilee Debt Campaign figures only $46 billion of that has been delivered so far

100% cancellation, rather than the current programme of reductions, will certainly improve matters. At present, it is possible for countries to slip back into unsustainable levels of debt while their cases are being considered, rendering the process redundant, and 100% cancellation would significantly reduce that danger. Nevertheless, it is to be hoped that this change of financing will become linked with a reworking of the debt cancellation process. A process is needed that is fast, flexible and transparent.

There’s also some coverage of this at businessinafrica.net

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