Rushing To Forgive Poor Countries' Debt
November 27, 2000
Lobbyists -- ranging from church groups to celebrities -- for various small and poor countries have successfully accelerated the process of forgiving those countries' debts to international organizations. Critics warn that too many of those countries are being let off the hook with little or no guarantee that they have shaped up their economies -- let alone justified why they should be forgiven their debts.
On November 6, President Clinton signed legislation that provided $435 million in debt relief for what are known as "Heavily Indebted Poor Countries." The measure also gave America's blessing to the International Monetary Fund to use the proceeds of some limited sales of its gold reserves for further debt relief.
- The IMF and the World Bank have a goal of getting 20 countries to begin to receive cash-flow relief by the end of this year.
- About 12 countries have so far qualified -- Tanzania, Mozambique, Bolivia, Cameroon, Uganda, Mauritania, Honduras, Mali, Senegal, Burkina Faso, Benin -- and possibly Guyana.
- Once the 20 countries have been processed, officials say that debt relief worth $30 billion will have been committed.
- Moreover, in the past year the G-7 countries have pledged to reduce the debts that these poor countries owe them bilaterally by 100 percent.
Critics fear debt relief will allow countries to continue pursuing bad economic policies. The current hasty process -- with a deadline at the end of the year -- only heightens those fears.
Source: "Can Debt Relief Make a Difference?" Economist, November 18, 2000.
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