• Debt and MDGs

Debt and MDGs

This paper analyses the potential role of debt relief in supporting sustainable development that will lead to the attainment of the Millennium Development Goals. Sustained growth is a fundamental determinant of reducing poverty because it enables households to increase their income expenditure and it also provides the government with resources to provide infrastructure and social services.

A number of observations are made:

• although the HIPC program is more ambitious than previous debt reduction programmes, it is not grounded analytically in a realistic conception of the amount of debt reduction needed for most countries to achieve a sustainable path of growth and poverty reduction
• broad based economic growth and poverty eradication is a do it yourself process, which international bureaucrats cannot drive. Financial and technical assistance from outside can help an internally driven process, but if assistance from outside dominates the policy making process aimed at poverty eradicating growth, it is more likely to fail
• linking debt relief to implementing IMF and World Bank conditionalities undermine policy ownership that is necessary for poverty reducing growth
• Africa will need debt cancellations as well as additional grants to finance expenditure in social services and investment in infrastructure in order to attain the millennium development goals
• in almost all African countries a big push in investment is needed to attain the Millennium Development Goals, especially in areas of infrastructure and human capital
• in order to attain the MDGs, African countries need to draw a 10 year perspective plan that is derived from a detailed analysis of what it will take to achieve all MDGs
• an appropriate development strategy for African countries must of necessity include agricultural transformation that will increase productivity of smallholder farmers.

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