Date: Wed, 10 Mar 1999 13:36:32 -0500 From: Robert Weissman <[EMAIL PROTECTED]> To: Multiple recipients of list STOP-IMF <[EMAIL PROTECTED]> Subject: Chic Tribune on debt >>The Chicago Tribune >> >>POOREST NATIONS MIRED IN BIG DEBT >> >>By Merrill Goozner >>Washington Bureau >>March 10, 1999 >> >> WASHINGTON -- The devastation wrought >> by Hurricane Mitch in Central America is >> giving new impetus to a movement to help >> the world's poorest countries by granting >> them large-scale debt relief. >> >> Advocates contend that debt forgiveness >> wouldn't be that costly for the industrial >> countries owed most of the money but would >> enable fledgling democracies to redirect their >> sparse budgets to socially and economically >> productive uses. >> >> A coalition of not-for-profit organizations and >> church groups has organized a worldwide >> movement called Jubilee 2000 to press for >> debt relief, not just in Central America but >> also in sub-Saharan Africa and other parts of >> the world still burdened with high interest >> payments on old loans. >> >> Debt relief would reduce or eliminate their >> large interest payments to the World Bank, >> the International Monetary Fund and the >> industrialized countries that had extended >> development loans over the past >> quarter-century. Most of the money went for >> failed development projects, and some of it >> was siphoned off by corrupt regimes, few of >> which are still in power. >> >> The movement has been endorsed by Pope >> John Paul II and retired Archbishop >> Desmond Tutu of South Africa. Rep. Jesse >> Jackson Jr. (D-Ill.) has introduced a bill with >> 44 co-sponsors that would cancel the U.S. >> portion of the $230 billion owed by the 31 >> African countries that are ranked among the >> poorest in the world, with per-capita incomes >> under $500 a year. >> >> Lending governments have balked at blanket >> debt relief, preferring an IMF-World Bank >> program that links debt reduction to changed >> economic policies in what they call Highly >> Indebted Poor Countries, or HIPCs. Donors, >> led by the U.S., Japan and Germany and >> organized in what is called the Paris Club, >> have offered to stretch out their portion of >> debt repayments in exchange for meeting >> these so-called structural adjustment policies. >> >> These adjustment policies are similar to >> conditions set by the IMF in countries >> receiving bailouts in recent years. The global >> lender of last resort requires balanced or >> near-balanced budgets, monetary controls to >> avoid inflation, and dismantling >> government-owned monopolies and policies >> that protect domestic industries. >> >> The IMF-World Bank program also requires >> the countries to stick to the adjustment >> policies for as long as six years before >> getting debt relief. The program seeks to >> bring payments below 20 percent of export >> earnings. The IMF says 41 countries qualify >> for its program because their total debt is at >> least twice their annual export earnings. So >> far, only two, Uganda and Bolivia, have used >> the program. Another five are in the process >> of being qualified. >> >> An IMF program brochure confidently states >> that "the initiative should eliminate debt as an >> impediment to economic development and >> growth and enable HIPC governments to >> concentrate on the difficult policies and >> reforms for achieving sustainable >> development." >> >> Jubilee 2000 officials scoff at such >> suggestions. They say there are 52 countries >> around the world owing a combined $370 >> billion that desperately need immediate debt >> relief. >> >> "It's an Orwellian use of the word >> `sustainable,' " said David Bryden, >> coordinator for the Jubilee 2000 campaign in >> the U.S. "The Philippines (whose debt >> burden is not high enough to qualify for the >> program) is paying three times more in debt >> service than it is on health spending. Children >> going uneducated or unvaccinated is not >> sustainable." >> >> At the heart of the debate is a philosophical >> divide over the best way to stimulate >> development in regions that have largely >> been bypassed by the economic events of >> the last two decades. Finance officials of the >> developed world, which controls the IMF and >> World Bank, believe that economic policies >> enforced through stretched-out but still >> rigorous debt-repayment schedules will >> create an investment climate in these >> countries that can attract foreign capital. >> >> "There's always the problem with blanket >> debt relief that it could lead to a new round >> of errors," said Nancy Birdsall, who is at the >> Carnegie Endowment for International >> Peace after serving as a vice president at the >> Inter-American Development Bank, a major >> lender in Latin America. "It's easy to get >> back on a train that takes you nowhere." >> >> But the not-for-profit groups from the >> poorest countries, which generally depend on >> one or two major crops or commodities for >> export earnings, argue that they have been >> on a train to nowhere for quite some time. >> Per-capita income in most of sub-Saharan >> Africa and Central America dropped sharply >> over the last two decades. The recent >> currency crises in such countries as >> Indonesia and Thailand have raised new >> questions about the proper development path. >> >> They point out that even reduced payments >> leave them on a debt treadmill, especially as >> prices for their exports have been steadily >> falling in recent years. >> >> "We have seen from the ground level the >> consequences of following IMF policy >> prescriptions," said Jean Bakole, who >> recently lobbied Congress to support >> Jackson's debt-relief bill on behalf of a >> coalition of 34 African non-profit groups. >> "These policies tend to undermine local >> businesses, drive up unemployment, damage >> the environment, harm consumers, >> undermine public health and increase >> poverty."
