Debt Forgiveness for Developing Countries

Female: Since the mid-90’s there has been gathering public support for debt forgiveness, one catalyst was Hurricane Mitch. The people of Honduras seemed to have lost everything except their debt. It’s even become a favorite cause for pop stars like Bono.

Bono: —isn't it? Here’s the idea. I don’t want our money. We don’t have to send in our money. We just got to stop asking starving people to give back the money our government’s lent them plus interest. Where the banks won't cancel the debts unless the politicians tell the banks to do that and the politicians won't tell the banks unless we tell them to do that, so that’s why I'm here. Are you with me?

Female: When the leaders of the world’s richest countries met last year, tens of thousands from the human chain around the conference wall in Birmingham to call for debt to be canceled.

Daleep Mukarji: It’s been a great out pouring of human spirit, making a difference and look at the crowds, look at the energy, look at the commitment. We can make a difference. Christian Aid has shown people care, people’s power will make a difference. People are being heard and people wanted change. I think it’s great. It's been a great day today. I'm so excited.

Female: And the politicians did take note. Clare Short, British Minister for International Development received boxes of global petitions.

Clare Short: When people are principled and idealistic and understand that we can’t build a decent world here or anywhere, it's the poor below could climb up to their poverty, then we could do it. And today you’d shown idealism is alive and well in process.

One of those responsible for the grounds swell of public support was Ann Pettifor, Director of Jubilee 2000, which has led the campaign for debt cancelation.

Ann Pettifor: There are now campaigns and organizations in 40 counties around the world. We have a global petition and that when I last counted we’d counted in a 123 countries around the world. So there are some cases like the World Bank who are kindly creditors. It’s very hard for creditors to write-off debts. It's not their natural business, their business is making loans and getting return on that. And so yes, we are critical of the World Bank and we are critical to the IMF, but they in the sense or in unattainable position. There are in the position of being both plaintiff, judge and jury in the international debt situation.

Female: Though some countries like Japan and calls Germany were reluctant to write-off debt. The World Bank successfully pushed for a major new program, the Heavily Indebted Poor Country Initiative, HIPC for short as James Wolfensohn, President of the bank explained three years ago.

Male: Mr. Wolfensohn.

James Wolfensohn: I think this is a breakthrough and it's a first time that there is a methodology of dealing with debt in a comprehensive way and to give companies the possibility of exiting from unsustainable debt. The Work Bank will establish and manage a trust fund to deliver the debt relief for those countries. There is an indication of our result to support this initiative that the bank has committed $500 million.

Female: So far, 10 countries have qualified for debt relief amounting to US$8.5 billion. The Norwegian government has been calling for a global initiative for some time.

Hilde Johnson: There is corporation between all the different multilateral financial institutions. With the regional development banks with the World Bank with the IMF, all of the different countries, the creditors, have come together, had agreed to a solution. It has a comprehensive solution for the debt problems of the poorest countries. In my view, that’s totally new and it's very seldom that these institutions can or do cooperate on such a comprehensive basis.

Female: But HIPC has its critics, the relief is too little and comes too late. Countries have to apply strict financial and social reforms before they can qualify for a relief. And so far, only three countries Uganda, Bolivia, and Guyana have received relief. Mozambique is in next inline.