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DEBT' CANCELLATION: IS JUNE 11, 2005 A NEW START FOR AFRICAN COUNTRIES?
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So, a very good new for debt laden African countries. G-8 (in fact G-7 because Russia had not yet given its approval) finance ministers took the formal decision on June 11, 2005 to wipe out US$ 40 billion of debts owed by 18 of the world's poorest countries.
The happy elected African countries are: Benin, Burkina Faso, Ethiopia, Ghana, Madagascar, Mali, Mozambique, Niger, Senegal, Rwanda, Senegal, Tanzania, Uganda and Zambia. Other beneficiary countries are from Latin America: Bolivia, Guyana, Honduras and Nicaragua.
Even if the decision is for the time being a formal one, (that needs to be endorsed by the forthcoming G-8 heads of states meeting scheduled for July 6-8, 2005 at Gleneagles, UK), it represents a tremendous breakthrough.
Indeed, June 11, 2005 will stands in history as the date when the richest industrial countries of the world "contemplated" the possibility to cancel debts owned by the poorest countries of the world. That is the end of a taboo.
Remember, for three decades running we have been told that such occurrence was not conceivable, because it would create a prejudice against countries that had always practiced good governance and taken relevent economic measures to service debts.
Yet, the formal decision of June 11, 2005. From now on the subject could never be ignored or pushed aside again. For that reason alone, June 11, 2005 represents a new start for African countries.
UK's finance minister, Gordon Brown, the mind master behind the historic decision declared: "The issue was no longer whether rich countries could provide a package big enough to speed up development in the world's biggest continent, but how quickly it could be delivered."
Let us hope that the momentum would not died out in the labyrinth of procedures and political fights between G-8's leaders.
Indeed, as you may know, there is, right now, a political row ragging about 2007-2013's European Union budget. France's Chirac and Germany's Schroeder would like to see the end of the famous rebate obtained in 1984 by UK's Prime Minister Margaret Thatcher that amounts now to about Euro 4.5 billion a year and could reach Euro 7 billion in year 2007. UK's Blair is adamantly refusing to accept a review of the rebate without full debate on EU's budget dedicated to Common Agricultural Policy. No doubt that if the squabble drags on it would have some negative impact on quick implementation of the debt cancellation's decision.
WHAT ABOUT OTHER AFRICAN COUNTRIES?
Further, one notices that only 14 sub-Saharan African countries out of 48 are listed to profit right away from the decision. What about the others, which are as debt stricken as the elected ones? When would their cases being considered?
The left over countries felt the efforts consistently made to servicing debts are not recognized. No doubt that from now on, there will be some kind of ill-will from some countries to comply with the rules and promptly service debts.
Declared Kenyan Planning and National Development Minister Peter Anyang Nyongo:
"Those faithful in servicing their debt like Kenya are being ignored while HIPC (Highly Indebted Poor Countries) who have failed to service the debt are getting more attention. This is not good for Africa." He goes further stating:
"If countries with economic potential like Kenya are forgiven their debt, it will help to pull up the other countries in the region to grow their economies. Concentrating on HIPC countries is not a very progressive thing to do."
JUNE 11, 2005 WOULD BE A FRESH START ONLY IF ADDITIONAL LOAN PACKAGES ARE MADE AVAILABLE TO DEVELOPING
Is that true? Would the economic situation in African countries improve just because all African debtors get debt cancellation?
In previous deliveries the problem had been analyzed to reaching the conclusion that additional loans to developing are an absolute necessity if one is really concerned about alleviating poverty in sub-Saharan African countries.
Let us hope G-8 heads of states meeting at Gleneagles, UK (July 6-8, 2005) would agree to the decision taken by finance ministers on June 11, 2005 and lay down non procedural agenda to first effectively deliver the debt cancellation to the beneficiary countries; and, second, consider the cases of other debt burden African countries.
However, if African countries themselves do not follow-up with developing strategies that really create wealth for all, they will be turning in circle to come back to square one within few years time.
And then, it would be difficult if not impossible to convince the international community to provide again debt relief to Africa. For more on the matter please read previous deliveries.
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Dr. B.M. Quenum
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