G8 debt relief 'not good enough'

The announcement by G8 summit leaders in Kananaskis in Canada on Wednesday to grant up to one billion dollars in additional debt relief to some of the world’s poorest countries represented neither progress nor a breakthrough on debt relief, according to Jubilee South Africa.

“The announcement is proof that the International Monetary Fund’s (IMF) debt relief initiative has failed,” Jubilee South Africa representative Neville Gabriel said on Thursday.

The summit leaders said their contribution to the Highly Indebted Poor Countries (HIPC) initiative would benefit 22 African states that qualified for the International Monetary Fund and World Bank plan established in 1996.

Gabriel said in a statement that the G8 were only trying to catch up on empty promises made three years ago at the Cologne summit for $100-billion in debt relief in terms of the HIPC debt relief initiative.

“To date the HIPC initiative has only cancelled one-fifth of the promised total,” Gabriel said.

“Yet four African countries will pay more in debt service after HIPC debt relief and five countries will pay just as much as they did before.”

Gabriel said the new announcement was intended to provide extra relief to those countries that would not see any real reduction in debt servicing after HIPC debt relief, due to tumbling international commodity prices. This showed that the HIPC debt relief system would not work.

“One hundred percent debt cancellation is required for Africa to meet the Millennium Development Goal of halving poverty by 2015,” Gabriel said.

“Debt sustainability should not be measured according to export earnings, as HIPC does, but according to how much government revenue is left after poverty eradication programmes have been costed.”

Gabriel said tinkering with the debt relief mechanism by topping up its trust fund would not solve the problem.

The announcement ahead of Thursday’s meeting with African leaders attempted to create the impression that the G8 were being generous to Africa.

“This is an early warning sign that they do not plan to offer much to African leaders on Thursday,” Gabriel said. - Sapa

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