Sunday, April 09, 2006

Concrete results of debt cancellation

I've always argued in favor of debt cancellation for African countries. I had no problem with the proviso that any country receiving such a cancellation should not be offered future loans, at least for a certain period of time. The money spent on repaying the debt and interest being repaid to the International Monetary Fund would be better served on improving such things as education, health care and infrastructure construction (and importantly, infrastructure maintenance), perhaps even microcredit projects.

Some argued that any such debt cancellation would be a waste of money because all African governments are irredeemably corrupt. They did so even though provisions could be quite easily added to the debt cancellation agreement between the country and the IMF so as to ensure that such savings were used for legitimate and dually agreed purposes. It's important not to take everything at face value. But there's an enormous difference between healthy skepticism and corrosive cynicism.

Most of these debts were granted to dictatorships. It's important to give to emerging African democracies the benefit of the doubt, even as you limit their room for future screwups. If the regimes steal the money or fall victim to cronyism, just shut off the tap immediately. If this had been done during the Cold War to the Mobutu regime or other dictatorships, these countries would never had accrued such enormous debts in the first place.

Cheap cycnism about debt cancellation is quite easy, but trying to improve things requires a little more persistence. Oxfam reports on how things can unfold if given the chance.

User fees were introduced in Zambia under IMF and World Bank pressure in the early 1990s, back when the two institutions were pressuring every country it could to adopt homogeneous neoliberal economic policies conceived in Washington and London without any regard for local specificities. Fortunately, the Zambian government finally reversed this disaster after the G8 countries erased about 40 percent of its debt.

The government of Zambia [last week] introduced free health care for people living in rural areas, scrapping fees which for years had made health care inaccessible for millions.
The move was made possible using money from the debt cancellation and aid increases agreed at the G8 in Gleneagles [Britain] last July, when Zambia received $4 billion of debt relief; money it is now investing in health and education.


Until today the average trip to a clinic would have cost more than double that amount, the equivalent of [an American worker having to pay $210] just to visit a clinic.

Zambia's national income is only $900 per person per year.

Zambia's per capita debt (before the debt relief) was $913 per person per year.

Bravo to the Zambian government! But imagine what the country could do for its people if most or all of the other 60 percent were forgiven.


Post a Comment

Links to this post:

Create a Link

<< Home