Thursday, August 19, 2004
How Much Would it Cost the UK to Cancel our Share of the Multilateral Debts of the 42 Heavily Indebted Poor Countries ?
It would cost each person in the UK £2.85 per annum over the next ten years.
www.wdm.org.uk/cambriefs/debt/callforchange.doc
www.wdm.org.uk/cambriefs/debt/callforchange.doc
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... more from that document (in case you didn't get round to reading it)
..."the UK must not wait for explicit support across the G7/8 before it acts, but lead by example.."
3. Benefits from 100% Cancellation of Multilateral Debt..."a recent study of the ten HIPC countries for which adequate data were available5 has shown that:
• In 1998, education spending was only $929m, less than the amount spent on debt service. Today, it is $1,306m – more than twice what is being spent on debt service.
• In 1998, debt service took up twice as much, in terms of resources, as spending on health. Since then, spending on health has risen by 70% and is now one third higher than debt repayments.
• There is no evidence to suggest that debt cancellation is being used to fuel military expenditures.
Other work6 highlights that as a result of assistance with their debts:
• Social spending across all HIPCs is estimated to have risen by about 20%.
• Mozambique has introduced a free immunisation programme for children.
• School fees for primary education have been abolished in Uganda, Malawi, Zambia and Tanzania, as have fees in rural areas of Benin.
• Mali, Mozambique and Senegal are due to increase spending on HIV/AIDS prevention.
These real outcomes, saving and improving the lives of millions of people, have been achieved with relatively limited resources. Even greater benefits would accrue from deeper debt relief."
5. Why the Arguments Against Full Cancellation of Multilateral Debt Don’t Add Up
We Can’t Afford It£171 million p.a. for ten years is equivalent to 0.7% of annual defence spending, or only 0.035% of UK public spending at 2004-5 levels.
It’s More Important to Increase Aid.."• Debt cancellation.. largely bypasses the considerable administrative overheads that attend the application for, granting and monitoring of overseas aid"...
• "Debt cancellation is a durable source of income... By contrast, aid delivery is often highly variable, being subject to the ebb and flow of political will in donor countries."
...
There’s Too Much Corruption – The Money Will be Wasted"As shown above, there is strong evidence to illustrate the effectiveness of debt relief granted to date, providing sound reasons for believing that further relief will also be used in an effective manner. However it must be acknowledged that improprieties have occurred on occasion with respect to the use of some debt relief proceeds; yet, equally, corruption and mismanagement haven’t been banished entirely from first world economies.
What is more pertinent is that systems can be created to ensure that the proceeds from debt cancellation are properly channelled into eradicating poverty. Uganda’s Poverty Action Fund (PAF) shows that they can. The first country to pass HIPC Completion Point, Uganda, set up the PAF to enable the transparent tracking of what monies have been received via stock write-off and what has been spent, and how. The tracking itself is, by design, performed by both parliament and civil society groups, and extends right down to the final delivery of finance at the local level. Local organisations have scrutinised and set the priorities for local projects, and have ensured that those responsible for handling expenditure from the Fund are held to account. Not only has this certified that debt cancellation proceeds have been used efficiently and well, it has also increased the skills of those involved (there are now many more people in Uganda who are trained in basic accountancy and business procedures as a by-product of the need to monitor the PAF) "
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..."the UK must not wait for explicit support across the G7/8 before it acts, but lead by example.."
3. Benefits from 100% Cancellation of Multilateral Debt..."a recent study of the ten HIPC countries for which adequate data were available5 has shown that:
• In 1998, education spending was only $929m, less than the amount spent on debt service. Today, it is $1,306m – more than twice what is being spent on debt service.
• In 1998, debt service took up twice as much, in terms of resources, as spending on health. Since then, spending on health has risen by 70% and is now one third higher than debt repayments.
• There is no evidence to suggest that debt cancellation is being used to fuel military expenditures.
Other work6 highlights that as a result of assistance with their debts:
• Social spending across all HIPCs is estimated to have risen by about 20%.
• Mozambique has introduced a free immunisation programme for children.
• School fees for primary education have been abolished in Uganda, Malawi, Zambia and Tanzania, as have fees in rural areas of Benin.
• Mali, Mozambique and Senegal are due to increase spending on HIV/AIDS prevention.
These real outcomes, saving and improving the lives of millions of people, have been achieved with relatively limited resources. Even greater benefits would accrue from deeper debt relief."
5. Why the Arguments Against Full Cancellation of Multilateral Debt Don’t Add Up
We Can’t Afford It£171 million p.a. for ten years is equivalent to 0.7% of annual defence spending, or only 0.035% of UK public spending at 2004-5 levels.
It’s More Important to Increase Aid.."• Debt cancellation.. largely bypasses the considerable administrative overheads that attend the application for, granting and monitoring of overseas aid"...
• "Debt cancellation is a durable source of income... By contrast, aid delivery is often highly variable, being subject to the ebb and flow of political will in donor countries."
...
There’s Too Much Corruption – The Money Will be Wasted"As shown above, there is strong evidence to illustrate the effectiveness of debt relief granted to date, providing sound reasons for believing that further relief will also be used in an effective manner. However it must be acknowledged that improprieties have occurred on occasion with respect to the use of some debt relief proceeds; yet, equally, corruption and mismanagement haven’t been banished entirely from first world economies.
What is more pertinent is that systems can be created to ensure that the proceeds from debt cancellation are properly channelled into eradicating poverty. Uganda’s Poverty Action Fund (PAF) shows that they can. The first country to pass HIPC Completion Point, Uganda, set up the PAF to enable the transparent tracking of what monies have been received via stock write-off and what has been spent, and how. The tracking itself is, by design, performed by both parliament and civil society groups, and extends right down to the final delivery of finance at the local level. Local organisations have scrutinised and set the priorities for local projects, and have ensured that those responsible for handling expenditure from the Fund are held to account. Not only has this certified that debt cancellation proceeds have been used efficiently and well, it has also increased the skills of those involved (there are now many more people in Uganda who are trained in basic accountancy and business procedures as a by-product of the need to monitor the PAF) "
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