Bishops Plea for African Debt Relief

Note That Corruption Is a Culprit Too

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ROME, MAY 28, 2005 ( Three African prelates left for Europe this week to press for action on debt cancellation. Archbishops Medardo Mazombwe of Zambia, John Onaiyekan of Nigeria, and Berhaneyessuys Souraphiel of Ethiopia will meet with European political leaders, according to a press release published Tuesday by the Catholic Information Service for Africa (CISA). Joining them are Cardinals Telesphore Toppo of India and Oscar Rodríguez of Honduras.

Attention on aid and debt questions is increasing in the months prior to the G8 meeting to be held July 6-8 in Gleneagles Hotel, Scotland. These annual summits are held at the level of heads of state or government. The G8 is made up of Canada, France, Germany, Italy, Japan, Russia, the United Kingdom and the United States.

One of the main themes at July’s meeting is Africa. As well, in past months the United Kingdom, which in the second half of this year will take over the presidency of the European Union, has been pushing for greater action on aid to Third World countries, and Africa in particular.

Prior to the departure of the African Church leaders the CISA on May 18 published a pastoral letter by Kenya’s Catholic bishops on the debt question. The letter noted that by the end of 2004 the external debt of sub-Saharan countries stood at $231 billion. This compares with an annual gross domestic product of these countries of about $350 billion.

«African countries cannot pay back their debts and sustain development,» argued Kenya’s bishops. They explained that many countries must spend more than 20% of their revenues just to pay the annual quotas of debt and the interests generated so far.

The bishops admitted that debt is not the only cause of economic problems in Africa. Other factors hindering growth are the trade barriers to African exports by the developed nations and the heavy subsidies in rich nations that make it impossible for African farmers to sell their produce on world markets.

They also explained that within Africa in the past «funding provided by aid and loans was often skimmed by corrupt officials, misused in wrong investments, or directed to purposes different that those for what they were provided.» As well, «Corruption on the part of our government officials and the lack of good governance are as much responsible of today’s poverty as external causes.»

«We cannot denounce the evil of foreign debt without accepting our responsibility for the growth of poverty among us,» the letter acknowledged.

An ethical issue

The pastoral letter argued that debt «becomes an ethical issue when it poses a major obstacle to the full enjoyment of human rights.» After noting how Kenya’s economic development has been hindered by corruption and poor government leadership, however, they continued: «Even if all Kenyans were hardworking people, living together peacefully and governed by virtuous leaders, they would still be poor because of debt service payments.»

Therefore, the letter concluded, should take action to relieve the debt burden, as well as fulfilling past promises regarding the amount of aid to developing countries.

Progress on the debt question has been slow in past months. According to the Wall Street Journal of Feb. 7, top economic officials from the Group of Seven major industrialized nations for the first time reached agreement on the idea of as much as 100% cancellation of debts that 27 very poor countries owe the World Bank, International Monetary Fund (IMF) and other global lenders.

But the article also noted that disagreements over how to finance the relief, particularly between competing proposals from the United Kingdom and the United States, were impeding action on the question. The logjam over competing proposals continued at the spring meetings of the World Bank and the IMF, the Associated Press reported April 18.

«Progress has stalled, not because of disagreement over the principle of debt cancellation, but over the mechanics of how to finance such cancellation,» said Debayani Kar, communications and advocacy coordinator for Jubilee USA Network.

Complex problems

The experience of debt relief so far is pointing to the conclusion that, while it is an important step, it needs to be just one part of an overall strategy to help developing nations. This was one of the conclusions of a working paper published last Sept. 27, «Beyond HIPC: Secure Sustainable Debt Relief for Poor Countries.»

The Center for Global Development, a Washington, D.C.-based think tank, published the paper. Its authors, Nancy Birdsall and Brian Deese, said that the fundamental objective of debt relief «is to ensure that the debt burden of the poorest countries is sustainable over the long term. Sustainable debt can then be managed without undue fiscal strain, contributing to macroeconomic stability that, in turn, encourages private sector investment and growth.»

But, in the years since the inception of the Highly Indebted Poor Countries program it has become evident, they argued, «that the HIPC debt relief system does not guarantee countries’ debt will remain sustainable.»

They commented that already in 2002 the IMF judged that up to half the countries then benefiting from debt relief would be thrown back into unsustainable debt by the following year.

The causes ranged from drought to a decline in commodity prices, and also the need to borrow further sums when promised aid does not arrive.

Some good news

But there is also some recent positive news on the economic front in Africa. The BBC reported May 18 that African economies grew more than 5% in 2004, the highest rate in eight years. The data came from the publication «The African Economic Outlook,» from the Development Center of the Organization for Economic Cooperation and Development and the African Development Bank.

As well as higher commodity prices, economic growth was spurred by greater political stability in some countries and a significant rise in official development aid to Africa. Agricultural production also benefited from the end of the drought of 2003, which hit Ethiopia, Malawi and Rwanda.

The report praised «steadily prudent economic policies,» but pointed out that Africa was still vulnerable to regional conflicts. The two organizations also called for more debt relief, action against corruption and support for small businesses.

Nevertheless, the previous month a report by the IMF and the World Bank affirmed that Africa would have to double economic growth, to about 7% a year, during the next decade if it is to meet targets on reducing poverty set for 2015. According a Reuters article April 12, the «2005 Global Monitoring Report» warned that «Under current trends, sub-Saharan Africa as a region will not meet any of the goals.»

Some additional help may be on the way, noted a BBC report last Tuesday. British Chancellor Gordon Brown announced a deal by European Union countries to double development aid. This could mean an extra 14 billion pounds ($26 billion) annually within five years. Doubts over the agreement exist, however, as the BBC noted that Germany, Italy and Portugal say they may not be able to afford the increase.

According to the undertaking, the 15 richest EU member states will reach a target of spending on aid of at least 0.51% of their national wealth by 2010. The other 10, poorer European member states, who joined the Union last year, agreed on a 0.17% target. Nations still struggling to pay their debts are no doubt hoping that an agreement will also be reached at the July summit.

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