Africa Needs Debt Cancellation, Not More IMF Programs
Sub-Saharan Africa, so rich in human and natural resources, remains
the economically poorest region of the world. Half of its people
live in poverty, and in many countries economic conditions have
been getting worse for the last 20 years or more.
The greatest barrier to economic recovery is the region's overwhelming
debt burden, which amounts to about $230 billion ($203 billion
if South Africa, with its anomalous history, is not included).
Thirty-three of the region's 44 countries are designated heavily
indebted poor countries by the World Bank; most of the rest nearly
qualify for that ranking. Creditors -- chiefly the International
Monetary Fund (IMF) and World Bank -- impose harsh conditions,
and investors shy away from countries with unsustainable debts.
Much of the debt accumulated by African countries was built up
during the 1970s, a time of reckless lending by banks and international
agencies, and was agreed to by undemocratic governments. In many
cases, the population of the borrowing country realized little
benefit from the loans as the money disappeared in failed infrastructure
projects, corrupt schemes, or unwise investments. The debt has
continued to grow since then as governments take out new loans
to pay off old ones.
In 1996, sub-Saharan Africa (minus South Africa) paid $2.5 billion
more in debt servicing than it got in new long-term loans and
credits. The IMF alone has transferred over $3 billion out of
Africa since the mid-1980s.
It is the poor people of the indebted countries, those who benefited
least, who end up paying the bills through scarce resources diverted
to debt servicing, and through the effects of the IMF/World Bank
austerity programs. These "structural adjustment programs,"
which have been imposed repeatedly on almost every country in
the region since the early 1980s, mandate massive lay-offs, sharp
reductions in credit, increased taxes and higher interest rates,
cuts in spending on health and education, and currency devaluation
Average real wages decreased in 26 out of 28 African countries
surveyed during the 1980s. Cuts in health spending have led to
an increase in infant mortality; African children are expected
to account for about 40% of infant deaths worldwide by the year
2000. Millions of small farmers, especially women, have been devastated
by IMF-induced cuts in credit and agricultural services. Some
40% of the population suffers from some degree of malnutrition.
These programs have failed. Although the IMF invariably insists
that indebted countries adopt structural adjustment programs,
World Bank figures show that 63 of 69 countries under such plans
saw their external debt increase during the programs. The recent
bailouts in East Asia came with similar conditions attached, and
economists from across the ideological spectrum have strongly
criticized them for encouraging recession and layoffs and otherwise
dramatically increasing the pain of the financial crises for ordinary
people. What has gone too-little remarked is that similar programs
have been forced on Africa for nearly 20 years with devastating
results.
Congress must insure that none of its actions force countries
to abide by more IMF conditions in order to qualify for trade
or other benefits. No encouragement should be given to the flawed
policies that have impoverished sub-Saharan Africa.
Debt is what subjects African countries to the mandates of the
IMF and World Bank. Debt is what diverts resources from health
and education spending. And debt is what inhibits productive investment.
Any plan to benefit Africa must include comprehensive debt cancellation
for sub-Saharan Africa.
- The external debt burden of sub-Saharan Africa has increased
by nearly 400% since 1980, when the IMF and World Bank began
imposing their "structural adjustment programs."
- External debt per capita for the region (not including South
Africa) is $365, while GNP per capita is just $308.
- The external debt for the region (again excluding South Africa),
at some $203 billion in 1996, represents 313% of the annual
value of its exports.
- Debt servicing for the region amounts to about 20% of its
export income.
- Africa spends four times more on debt interest payments than
on health care.
Congress should support programs for Africa which call for:
- Immediate cancellation of all bilateral debt owed to the U.S.
(including credits and guarantees).
- Commits the U.S. to meaningfully advocate for similar cancellation
by other creditor governments (such as its partners at the Paris
Club) and at the multilateral financial institutions.
- Acquisition and cancellation of African debt owed to U.S.
banks.
Congress should not support plans which fund the IMF/World Bank
debt relief program, the Heavily Indebted Poor Countries (HIPC)
Initiative. Its levels of relief are paltry and it requires several
years adherence to structural adjustment programs.
On January 29, Vice President Gore announced that the Administration
was committed to greater efforts for debt relief for the world's
most impoverished countries. He specifically mentioned the possibility
of supporting sales of part of the IMF's gold stocks to support
such relief. What was unclear, and what Congress should be aware
of, is that some gold-sales proposals would, in the name of debt
relief, actually fund the same IMF programs that have contributed
to the impoverishment and growing debt burden of countries in
Africa and elsewhere.
The Vice President's announcement should be warmly welcomed.
But members of Congress who care about Africa should work to make
sure that the debt relief he advocates is real debt relief. Any
proceeds from the sale or other conversion of IMF gold stocks
should go directly to debt relief and not to programs controlled
by the IMF and/or the World Bank.
More Information on:
IMF and the Brazilian Crisis - www.preamble.org/IMFinAfrica.htm
The Debts of Corruption -
www.jubilee2000uk.org/features/odious.html
IMF Impact on African Countries - www.citizen.org/pctrade/Africa/rrbobfn2.htm
Why South Africa Should Say 'No' to IMF Policies - www.twnside.org.sg/souths/twn/title/afri-cn.htm
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