This report was originally published by EURODAD
In 2005, following significant public pressure, the G8 announced a plan to cancel US$40 bn in debt of 18 of some of the world’s most impoverished nations. 14 African nations and 4 Latin American nations will, in 2006, benefit from the cancellation of debts owed to the World Bank, IMF and African Development Fund (AfDF). While the deal does not go nearly far enough it is significant that for the first time the international community has acknowledged that 100% cancellation of some multilateral debts is urgently needed and can be accomplished.
While several African countries included in this initiative will receive a major debt cancellation, no country will receive the claimed full 100% debt cancellation. In Africa, the picture is mixed: Burkina Faso and Uganda will have the biggest proportion of their debt cancelled with up to 90%. Mozambique on the other hand will receive around a 40% debt cancellation. In Latin America however, the picture is gloomier.
For the four Latin American countries considered heavily indebted the amount written down will be 30% on average, meaning that there are several important gaps in official plans. Among these gaps are that impoverished Latin American countries will continue to pay hundreds of millions of dollars in debt service to the Inter American Development Bank. It is inequitable and illogical that some countries should benefit more than others within the same official initiative, and we are calling for the initiative to be extended to the Inter-American Development Bank by the time of its annual meeting in April 2006.