June 11, 2005

Governments cheer G8 debt relief plan, but also want more done

Africans cheered a debt relief deal by the world's richest nations meant to rid their continent of poverty and disease but some also questioned the choice of beneficiaries. The agreement was struck by finance ministers of the Group of Eight industrialised nations after a UK-led campaign. British finance minister Gordon Brown said the package included 100 percent debt cancellation for highly indebted countries. "It is incredible. I did not expect this to happen. It sounds like a fairy tale. They (rich nations) now mean what they say. I am very delighted with the decision," said Zambian Finance Minister Ng'andu Magande. "This is an important decision that means we can have more money saved from debt servicing being directed to education, health, infrastructure and social sectors," Mozambique Prime Minister Luisa Diogo stated.

Africans saw the package as fuelling investment in their countries, for long viewed with scepticism by an international investor community wary of their political stability and their economic management styles. Some officials said whether they eventually got a cent from the debt relief package depended on whether their governments continued to fight corruption and promote internal growth to expand exports to industrialised nations.

Kenya, being critical of the criteria for selection of beneficiary countries, stressed that the country needed relief but was punished for its ability to meet its debt service obligations. "Those faithful in servicing their debt like Kenya are being ignored while HIPC (Highly Indebted Poor Countries) who have failed to service the debt are getting more attention. This is not good for Africa," Kenyan Planning and National Development Minister Peter Anyang Nyongo said in Nairobi. "If countries with economic potential like Kenya are forgiven their debt, it will help to pull up the other countries in the region to grow their economies. Concentrating on HIPC countries is not a very progressive thing to do," he said.

According to Tanzania's Finance Minister Basil Mramba, his country appreciated the debt relief it currently got but wanted more. He said Tanzania spent 12 percent of its state budget servicing debt, cash that could be moved to other areas to grow the economy and improve lives. Zambian Finance Minister Magande said he had plans for the extra cash in his purse if Zambia won further relief: recruit 7,000 new teachers waiting for employment since leaving college in the past several years and next year employ all teachers out of work; then scale up provision of life-prolonging AIDS drugs to those who need them.

According to the British minister Brown, the G8 would reach a deal to release over $40 billion to write off all the multilateral debts of some of the world's poorest countries. Treasury officials said this money would be enough to wipe out debts owed to international organisations by 18 countries, which are at the so-called completion point of the IMF and World Bank initiative for HIPC. The 18 countries are: Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania, Uganda and Zambia. (Rts)


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