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Friday, December 9, 2016
Debt relief deal for Zambia is 'perverse'
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 CAFOD has condemned a debt relief package for Zambia which will leave the country paying out more in debt repayments next year than it did before cancellation. Henry Northover, CAFOD's debt policy analyst, said: "This perverse settlement exposes the flaw at the heart of the World Bank/IMF 'Heavily Indebted Poor Countries' initiative. The amount of debt relief is not decided by how much money a poor country needs to tackle poverty, but on narrow economic criteria laid down by the financial institutions based in Washington. Zambia is one of the poorest countries in the world with an average life expectancy of 44 and falling because of the impact of HIV/AIDS. The test for any debt relief system is whether it allows a country like Zambia to divert funds from debt repayments into basic health and education. The World Bank and IMF have failed this test and betrayed their own promises to the poor that debt relief would provide an escape route from poverty." Zambia's debt is estimated at $6.5 billion, more than four times its GDP. Yet under the new HIPC agreement, annual debt repayments will actually increase from $150 million to $235 million by 2002. This is because Zambia borrowed money from the IMF back in 1995 - primarily to help pay off earlier debts - which now has to be paid back in full from the end of next year. The Bank and Fund, meeting this week to discuss the debt relief plan for Zambia, refused to listen to calls from CAFOD's partners to cancel more of the country's debt. CAFOD is now lobbying the UK government to use their influence in the World Bank/IMF to push for more cancellation. Henry Northover said: "This news about Zambia is a stark reminder that the battle for debt relief for the poor is far from over. This weekend's Jubilee 2000 rally in London should be the start of a new and vigorous campaign to force the rich countries to make good on their promises and go further to cancel 100 per cent of the debts owed by the poorest countries." The decision on Zambia comes on the eve of a major conference on debt taking place in the Vatican this weekend (3 December). Church leaders from over 20 heavily indebted countries will meet to discuss ways that the Church can use its key position in civil society to ensure that the proceeds of debt relief are used to benefit the poorest of the poor.
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