Rattling the Chains of Debt

KASAMA Vol. 15 No. 2 / April-May-June 2001 / Solidarity Philippines Australia Network

The Jubilee Australia Debt Relief Campaign

By MARK ZIRNSAK, Social Justice Development Officer, Uniting Church in Australia (Victoria).

The Jubilee 2000 Debt Relief Campaign made significant progress on the road to having the unpayable component of Third World debts cancelled for the benefit of some of the world's poorest people. However, the First World creditors failed to deliver on the cancellation of the unpayable part of developing country debt by the end of 2000. Jubilee Australia aims to hold the International Monetary Fund (IMF), World Bank and First World creditors accountable to deliver on the promises of debt relief they have made. Jubilee Australia will also be seeking to persuade the Australian Government to go further in terms of the debt relief it is willing to grant to poor countries that owe Australia money.

What Jubilee 2000 Achieved

Debt relief for the world's poorest people is now firmly on the global agenda. After receiving petitions with 17 million signatures in support of the Jubilee 2000 Campaign, the G7 meeting in Cologne in June 1999 agreed to a further US$45 billion of debt relief. Since then the US, UK, France, Italy, Germany, Japan, Canada, the People's Republic of China, Australia and others have promised to cancel some of the bilateral debts owed directly to them by heavily indebted poor countries (HIPCs). The debt relief is conditional on the money released from debt service being used to alleviate poverty.

Australia has effectively cancelled the $6.3 million owed by Nicaragua and has promised to eventually cancel the $12.7 million that Ethiopia owes. In the meantime, the Australian Government continues to collect debt repayments from Ethiopia. The Gross National Product per head per year in Ethiopia is the lowest in the whole of Africa at US$100. The Australian Government has committed $55 million to debt relief through the IMF and World Bank HIPC Initiative.

Areas of Concern

There are some significant concerns that what the G7 promised is still not enough:

the amount of debt relief is still insufficient in terms of reducing the debt service payments the poorest countries will be required to make; and
the number of countries eligible for debt relief is too limited.

At the end of 2000, 22 countries had qualified for debt relief under the HIPC Initiative. Of these, 16 will still be spending more on debt repayments than on health after the debt relief is implemented. On average these countries will have their debt repayments reduced by only 29%. Collectively they will still pay US$2 billion per year in debt service, which is over one and a half times as much as they will spend on health care.

The needs of these countries are great. According to the World Bank, some 300 million Africans live on barely US65 cents per day. Mauritania will still be paying US$63 million on debt repayments after debt relief, compared to US$51 million on education and US$17 million on health. Mauritania has an adult illiteracy rate of 62 percent.

Jubilee 2000 believes there are 52 poor and indebted countries in urgent need, but only 36 of these are eligible for debt relief under the HIPC Initiative. The limitation of the HIPC Initiative is based on the level of debt relief First World creditors are willing to grant, instead of the level of human need in these countries. A number of the developed country creditors have recognised the need to grant debt relief beyond the 36 eligible countries. Italy has promised to grant debt relief to up to 62 poor countries, the People's Republic of China to 44 and the United Kingdom to up to 41.

Future Campaign Direction

The global campaign feels the need to continue pressuring creditor governments to support conditional debt relief, so that debt repayments do not keep people in poverty. In Australia, the campaign continues to gather significant momentum. In excess of 450,000 Australians signed the global petition in support of the campaign, making this the largest petition on an international issue in Australia's history.

On the negative side, the Australian Government has failed to consider debt relief for Vietnam, a World Bank and IMF-recognised HIPC that owes Australia $39 million directly. Vietnam is currently not eligible to be granted debt relief through the HIPC Initiative, due to the limited debt relief granted so far by the developed world creditors.

UNICEF reports that 39% of children under 5 in Vietnam are suffering malnutrition and 45% are anaemic. Only 66% of children in Vietnam complete primary school, partly due to the removal of government subsidies as Vietnam has bowed to international pressure to economically "reform".

Australia is also owed money directly by three poor countries in need of debt relief in our region, Bangladesh which owes Australia $21 million, Nepal which owes $10 million and the Philippines which owes $319 million.

The aims of the Australian campaign are now to persuade Australian politicians to:

support the conditional cancellation of the unpayable component of Third world debts and the wider Jubilee Australia platform;
encourage other governments to support the debt relief based on human need; and
To cancel the bilateral debts owed to Australia by Vietnam, Bangladesh, Nepal and the Philippines.

What can you do? Anyone interested in learning more about the campaign or helping to achieve debt cancellation for some of the world's poorest people, should contact the Jubilee Australia office at (03) 9815 1677, e-mail jubilee@tear.org.au or visit the website www.jubileeaustralia.org.au.

Source: Peace Courier, March/April 2001, APC

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