October 4, 1999
Unburdening the Third World
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resident Clinton made a dramatic and important announcement last Wednesday when he
pledged to cancel the debt owed to Washington by
the world's poorest nations, as long as they used the
savings for health, education and other anti-poverty
His promise comes on top of an Administration pledge the week before to seek $1 billion
for an initiative that would mainly retire poor nations' debts to international lenders.
It is now up to
Congress to provide the money, and other wealthy
nations to match Mr. Clinton's commitment.
The debt owed by the poorest nations -- most of
the 36 countries covered by the President's announcement are in Africa -- helps trap them in
misery. Most of these nations are paying debt service on loans from decades ago, when irresponsible
lenders pushed profligate governments to borrow.
Their creditors long ago concluded they would never
be repaid, but some countries spend 60 percent of
their budget to keep rolling over these debts. The
burden has cut into spending on education and other
social programs. In some countries in Africa, the
entire health budget comes to only $6 or $7 a year
The World Bank and the International Monetary Fund began a program to try to reduce these
debts in 1996.
But only four nations have qualified --
Uganda, Bolivia, Mali and Guyana -- and it took
years of I.M.F.-imposed austerity do so.
A worldwide advocacy movement called Jubilee 2000, which
includes religious groups, development organizations and artists, has led a campaign for more
debt relief. At a June meeting in Cologne, Germany,
the world's seven wealthiest nations agreed to
forgive more of the debt owed by the poorest nations
to rich countries and international lenders.
The Cologne initiative was an improvement, but
it still fell short of what poor countries need.
Each wealthy country pledged to forgive some
of the debt it was owed and pay for a portion of the
debt owed to the World Bank.
famous for failing to honor these commitments, but
Treasury Secretary Lawrence Summers announced
recently that the Administration would ask Congress for the full amount it had pledged.
The President then followed with his decision to cancel the
rest of the debt owed directly to Washington.
Debt relief is a bargain for the United States,
which had lent comparatively little to poor countries
and has already written off most of the loans.
nations that could qualify for the President's plan
owe the United States $5.7 billion, but canceling that
entire amount will cost Washington only about $450
million because of earlier write-offs.
important as Washington's debt forgiveness, President Clinton's announcement will challenge other
nations to meet and go beyond their pledges in
Cologne and cancel their own debts.
A few nations will qualify for the debt relief by
the end of this year, and Mr. Clinton said that three-quarters of the highly indebted countries could get
relief next year.
The international community must
watch carefully to insure that the money saved does
benefit the poor. A well-run program can make a big
difference. Two years ago in Uganda, for example,
half the children of primary-school age stayed
home, mainly because their families could not pay
school fees. But Uganda used most of its $40 million
in debt relief to cancel those fees, and this year 90
percent of the children go to school. Now, it will
qualify for another $40 million of relief. Congress
should quickly approve the President's request,
which is a pittance for America but can improve the
lives of the most needy worldwide.