Debt and MDGs
Do the deal: the G7 must act now to cancel poor country debts
Making the case for debt relief
Authors:
; Oxfam; ActionAid UK; CAFOD
Publisher:
Oxfam, 2005
This paper calls on rich country donors and creditors to keep their promises and provide poor countries with a genuine exit from the burden of unpayable debts. The paper highlights that the failure of the HIPC initiative has made the case for debt cancellation even more compelling. Multilateral debt relief will be necessary to meet the MDGs, and as evidence suggests that the money saved in debt service payments has been put to good effect in reducing poverty.
Recommendations of the paper are:
- 100% multilateral debt cancellation must be provided now to all low-income countries which need such relief in order to meet the MDGs, under a fair and transparent process
- Debt relief should not be financed out of existing aid budgets, but from new donor contributions, and the sale or revaluation of IMF gold
- Debt relief should not be confined to HIPCs, but should also be extended to other poor countries that need debt relief in order to meet the MDGs
- There should be an end to harmful economic policy conditionality associated with debt relief. Debt relief should be provided to any country able to use such relief to meet the MDGs
- In countries where human development needs are greatest, and where the feasible tax base is narrow, future aid flows should be in the form of grants rather than loans for the foreseeable future
- In future, a fair, transparent and comprehensive international insolvency process should be created to allow creditor and debtor countries to resolve debt crises without compromising the ability of poor countries to meet the basic social needs of their people, and without forcing poor countries to repay what the insolvency process determines to be odious debts.
