As many as 40 impoverished nations could see upwards of $55 billion in loans forgiven after governors with the World Bank and the International Monetary Fund (IMF) have finally supported a plan to do just that. The plan is expected to be finalized by the end of the week.
“It’s a really significant step,” Jamie Drummond, executive director of Debt AIDS Trade Africa (a group founded by U2 front man Bono), said.
There are 18 countries that are expected to receive the relief first, as they have economic plans laid out, while another 22 will potentially follow suit, provided that they meet the criteria set out by the IMF in terms of economic strategies.
Some people, however, worry that the 22 countries might not see the necessary relief or will not see it for quite some time. “A country shouldn’t have to wait years when they need the money now for HIV/AIDS and to fight poverty,” Neil Watkins, national coordinator of Jubilee US Network, said.
It is unlikely that without this aid, these countries, which include Guyana, Nicaragua, Zambia, Niger, Honduras, and a number of others, would ever be able to get out of debt. Hmmm… never getting out of debt… sounds familiar, doesn’t it?
For over a year, antipoverty representatives, the United States, and Britain have been trying to bring this plan to fruition.
“To make growth achievable and future aid more likely to bolster success, we simply must confront unsustainable debt burdens in the poorest countries,” Treasury Secretary John Snow told representatives of the other 183 IMF and World Bank member nations Saturday.
During the G-8 Summit in Scotland in July, President George W. Bush, along with others from the Group of Eight, had signed off on the deal.
To bring the deal further into reality, Snow and other G-8 representatives vowed to replenish the lost funding with the World Bank in order to cover the costs associated with the forgiving of loans. This pledge would assure that there was still funding with the World Bank for a development mission.
The IMF had originally voiced its concern about the apparent unfairness of relieving debt for poor nations who had large debts, whereas those who had been careful when it came to falling into debt would not get the same treatment. The IMF decided to offer relief to any member nation whose annual per capita income is less than $380. Currently the role of IMF is to provide financial advice and loans to those nations that need it.
According to antipoverty activists, when poorer nations no longer have to worry about looming debts, they will be able to focus their attention on other concerns, such as education and health care. This is seen in countries such as Niger and Uganda, where minimal debt-relief has helped boost the economy.
“I think that really, for the first time, the developed world is beginning to show a very keen interest in getting the poor developing countries out of the rut they are in,” Kenyan Finance Minster David Mwiraria said.
Now, giving developing countries debt relief is all fine and good, but when are we going to realize that we’re setting ourselves up to be the next nations in need of the same treatment. America is a large nation with a giant, growing debtload, although it’s currently in denial about that. We have not been careful about getting ourselves into substantial debt, on both a personal and a government level, and I just have to wonder who will come bail us out of trouble when we finally admit that we, too, may never be able to get out of the debt we’ve created?