Sustainable debts
In 1999, the G8 summit promised to reduce bilateral and multilateral debt to a 'sustainable level'. They devised an assessment formula based on current debt in relation to export earnings. The poorer countries themselves might have suggested a different form of assessment.
In some cases, debt relief has been enough to pay primary creditors. But it is not enough to stimulate growth and reduce poverty. At this summit, $100bn was pledged for debt relief; only $31bn has been delivered. Small wonder that United Nations Secretary General, Kofi Annan, has expressed scepticism about governments' tsunami pledges.
Debt relief critics question whether poorer countries would invest money saved in education, which is universally recognised as predicting future wealth creation. They also ask whether monitoring mechanisms are in place to ensure that money is spent appropriately. However, a study of 10 HIPC countries meets their doubts.
In 1998, these 10 countries' education spending was less than their annual debt service to lenders. The study shows that today, twice as much on average is spent on education, compared with the amounts paid in annual debt service. Uganda has created a transparent model for monitoring the use of money saved and rediverted through debt relief. This model could be easily adapted to other countries.
For most poorer countries, though, money that ought to be used to provide clean water, health, education and sustainable development continues to flow back to the richer countries in debt repayments. And meanwhile, the case for real debt relief and cancellation grows stronger.
In some cases, debt relief has been enough to pay primary creditors. But it is not enough to stimulate growth and reduce poverty. At this summit, $100bn was pledged for debt relief; only $31bn has been delivered. Small wonder that United Nations Secretary General, Kofi Annan, has expressed scepticism about governments' tsunami pledges.
Debt relief critics question whether poorer countries would invest money saved in education, which is universally recognised as predicting future wealth creation. They also ask whether monitoring mechanisms are in place to ensure that money is spent appropriately. However, a study of 10 HIPC countries meets their doubts.
In 1998, these 10 countries' education spending was less than their annual debt service to lenders. The study shows that today, twice as much on average is spent on education, compared with the amounts paid in annual debt service. Uganda has created a transparent model for monitoring the use of money saved and rediverted through debt relief. This model could be easily adapted to other countries.
For most poorer countries, though, money that ought to be used to provide clean water, health, education and sustainable development continues to flow back to the richer countries in debt repayments. And meanwhile, the case for real debt relief and cancellation grows stronger.