[stop-imf] UNCTAD calls for debt cancellation

[robert weissman]

U.N.: Creditors should write off African aid
Continent sinking under mountain of debt, report says
The Associated Press
Updated: 6:05 p.m. ET Sept. 29, 2004


GENEVA - African countries are sinking deeper into the red and creditors
should cancel the continent=B9s debts to give it a chance to meet global
poverty reduction goals, the United Nations said in a report.

Africa requires a minimum economic growth rate of 7 percent to 8 percent to
stand a chance of achieving the United Nations=B9 Millennium Development
Goals, which include cutting poverty in half by 2015, according to the
report Thursday by the U.N. Conference on Trade and Development, or UNCTAD.

=B3Even if all the outstanding debt were to be written off, this would
represent less than half the resource requirements of Africa,=B2 said Kamra=
n
Kousari, one of the authors.

The continent received about $540 billion in loans from 1970 to 2002 and
paid back $550 billion, including interest. Yet it still had $295 billion o=
f
debts at the end of 2002, UNCTAD said.

=B3The further servicing of this debt represents a reverse transfer of asse=
ts
from these countries,=B2 Kousari said. =B3Is this justifiable?=B2

The problem is even more acute in sub-Saharan African countries, which
remain $210 billion in debt despite paying out 91 percent of the amount the=
y
originally borrowed.

Private investors also are put off because the debt burden means government=
s
are unable to invest in improving decaying infrastructure, the report said.

Sophisticated financing needed
To find a permanent solution to the problem, African countries will have to
pursue policies of prudent debt management, economic diversification and
sustained economic growth, UNCTAD said. Rich governments must support those
initiatives by increasing African countries=B9 access to their markets, as
well as by reducing =8B and eventually eliminating =8B agricultural subsidi=
es,
which make it harder for exporters in poor nations to compete.

=B3It is only through this partnership that African countries would be able=
 to
achieve sustained high growth rates and development, implement the poverty
reduction strategies necessary [and] halving poverty by 2015,=B2 the study
said.

Low levels of savings also fuel high poverty levels, it added.

The debt overhang is only partly due to the legacy of corrupt and
irresponsible governments, it said, adding that global economic shocks,
dependence on exporting a handful of commodities, poor reform programs and
the actions of creditors had all added to the problem.

A debt relief initiative launched in 1996 has had little impact, the study
said. The initiative was expected to reduce the external public debt of the
world=B9s 42 poorest countries, 34 of which are in Africa, but most of them
are still a long way from achieving sustainable levels of external debt, th=
e
report said.

Some countries don=B9t qualify
Several equally poor African countries are excluded from the debt-slashing
program as they were unable to implement sufficient economic reforms to be
allowed on board.

At the end of 2001, Nigeria had the continent=B9s largest debts, at $31
billion, followed by Egypt, with $29 billion, and South Africa, with $24
billion. Small economies, such as those of Equatorial Guinea and Comoros,
had the lowest of all the African countries.

The Millennium Development Goals were set out at the United
Nations-sponsored summit of world leaders in September 2000.

In a declaration adopted by 189 countries, the leaders promised to cut in
half the number of people living on less than $1 a day and people who do no=
t
have safe drinking water by the year 2015.

They also pledged to provide universal primary school education by 2015,
improve the lives of slum dwellers, halt or reverse the spread of HIV/AIDS
and other diseases, and improve the environment.
=A9 2004 The Associated Press. All rights reserved. This material may not b=
e
published, broadcast, rewritten or redistributed.

URL: http://msnbc.msn.com/id/6134566/