Italy urged to cancel world debt

CAFOD called on Italy to push for total debt cancellation for the world's poorest countries as Rome took over the chair of the G7 yesterday. Despite the headlines saying there has been 100 per cent debt relief, the poorest countries are in fact only having about a half of their debts cancelled. They are still left paying more to the world's richest countries than they spend on health or education. CAFOD policy analyst Henry Northover said: "The Jubilee Year may have passed with a fanfare of mutual appreciation amongst creditors for acting on debt, but the poor are nevertheless faced with a huge hangover of debt bills. "What is at issue is the standard used to assess what level of debt is affordable and how much to cancel. The current framework judges debt sustainability against exports earnings. Debt relief plans are about ensuring debtor countries are able to repay their remaining debts. They still do not take into account the punishing effect of debt on efforts to reduce poverty. "We argue that good economics and social justice are inseparable. It is possible to estimate how much countries should repay by analysing first how much they need to spend on poverty reduction measures in their own countries, before calculating what they can afford to repay." He said: "CAFOD believes that under this criterion only a complete cancellation of debt will allow the worst off countries to hit internationally agreed development targets." Aid agencies will be campaigning to make sure that the issue of 100 per cent debt cancellation plays a prominent part in the G7 summit scheduled for Genoa this July.