Forwarded by the Joliet Diocese Legislative Advocacy Network for the USCCB

Background on International Debt Relief

September 2004

Issue: Debt payments continue to drain resources that poor countries desperately need for health care, food, education, and social programs.  The burden of debt also impedes governments’ abilities to respond to the HIV/AIDS crisis, droughts, civil strife, and other emergencies. The U.S. Bishops have repeatedly said that “debt repayments should not come at the cost of basic human survival and dignity.”  People’s lives and dignity are being destroyed by debt.

 Background: For some time now, the USCCB has called upon Congress to extend and strengthen the Heavily Indebted Poor Countries (HIPC) debt relief program so that more countries may benefit.  Indeed, several countries have begun to see their debt reduced through the HIPC initiative, which was adopted in 1996, expanded in 1999, and renewed most recently in June 2004.

 However, many countries continue to be burdened by debt.  Even under HIPC there is a disparity among the amount of debt relief different countries receive, as that amount is determined by a country’s export earnings, rather than its government’s actual budgetary resources. Other countries remain ineligible because of their level of per capita income, despite their heavy debt burdens.

 Why is the Church Involved? As the Millennium approached – and even today - the Catholic Church played an active role in the advocating for substantial debt relief and passage and extension of HIPC.  Most recently, the USCCB urged leaders gathering for the G-8 Summit in June 2004 to recommit to debt relief for poor countries, echoing Pope John Paul II’s call to “reducing substantially, if not canceling outright, the international debt which seriously threatens the future of many nations.”  The G8 responded by extending the HIPC program until 2006.  The USCCB is also urging the implementation of key provisions within the U.S. Global HIV/AIDS Act of 2003 that limit the amount of debt that countries must repay to no more than 10 percent of their government revenue, or 5 percent for those countries facing a public health crisis. The USCCB insists that debt relief must accompany other forms of foreign assistance such as Millennium Challenge Account and the Global AIDS initiative.

What has been done so far?

The international movement to combat debt has leveraged $34 billion in debt cancellation for impoverished nations.  This first step of debt cancellation has:

v      100% of the debt cancelled has been spent on health care and education; none has gone to conflict or corruption.

v      nearly tripled school enrollment in Uganda,

v      vaccinated half a million children against killer diseases in Mozambique,

v      provided three extra years of schooling for Honduran children,

v      provided resources to fight AIDS in Mali, Senegal and Cameroon.

What more needs to be done?

These are important steps forward, yet more can and should be done. For example:

v      Only 24 of the poorest countries will see their debts reduced.  Other such as Haiti, Nigeria and Bangladesh, will see no relief at all.

v      The debt relief promised to date will reduce overall debt service by only one third.

v      Many countries have yet to see the debt relief promised as they struggle to implement World Bank and IMF economic austerity measures like privatization of water and further budget cuts.

v      To realize the debt reduction and fully realize a “Jubilee”, we need to reduce substantially, if not cancel outright the debt owed by the most impoverished nations without harmful economic conditions.

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