Toggle Menu

Jubilee 2000: Paying Our Debts

A massive natural disaster reminds us why people worldwide have been engaged by the issue of debt relief.

Robert W. Edgar

April 5, 2000

A massive natural disaster reminds us why people worldwide have been engaged by the issue of debt relief. Mozambique, along with several Southern African neighbors, faces years of reconstruction in the wake of recent storms and floods that government officials say did more damage than sixteen years of civil war. Although Mozambique has been granted some debt relief in recent years, when the storms struck it was still paying $1.4 million a week in interest. Mozambique has been granted a temporary moratorium on its debt payments, but it will still have to pay its creditors back. It is due for additional debt relief in April, but this may be delayed if Congress doesn’t contribute.

The reality in highly indebted countries is grim. Half of Africa’s population–about 300 million people–live without access to basic healthcare or a safe water source. In Tanzania, where 40 percent of the population dies before age 35, the government spends nine times more on foreign debt payments than on healthcare. In 1997, before Hurricane Mitch, Nicaragua spent more than half its revenue on debt payments. Until recently, it has taken countries in structural adjustment programs six or more years to get debt relief. For lenders this seems like common sense–make sure the country has its economic house in order before canceling debts–but the human cost is tremendous. Six years is a child’s entire elementary school education. If governments are forced to cut subsidies for public education and charge fees that make schooling too expensive for the poor, it cheats a whole generation of children.

In contrast, in countries where some debt relief has already been provided there is evidence of the potential benefits. For example, Uganda established a Poverty Action Fund, into which it pledged to deposit all the savings from debt relief. One goal is achieving universal primary education. With the resources freed from debt relief, combined with other sources, primary school enrollment has more than doubled, to 5.3 million children since 1997.

Concern about the need to provide deeper and faster debt relief gave rise to an international movement–under the banner of Jubilee 2000–to cancel the debt of the poorest countries by the end of this year. Grounded in biblical mandates of jubilee calling for the forgiveness of debt, the freeing of slaves and the return of lands so as not to perpetuate generations of impoverishment, this movement seeks to promote meaningful debt cancellation for the world’s poorest nations in order to reduce poverty and prevent further environmental degradation. There are now Jubilee 2000 campaigns in more than sixty countries, creditor and debtor alike. We in the faith community here in the United States have added our voice to those of other religious leaders, including Pope John Paul II and Bishop Desmond Tutu, who have eloquently stated the principles being raised by their churches regarding the need to set economic relations right. Almost all the major religious bodies in the United States–including Catholic, Protestant, Jewish and Muslim–are working together on this initiative. This commitment crosses the spectrum: Even the Revs. Billy Graham and Pat Robertson have endorsed the need to provide debt relief to poor countries.

Providing debt cancellation also makes good common sense. For example, there is a direct relationship between the debt and rampant deforestation, as governments sell off natural resources and chop down forests to plant cash crops to earn foreign currency. The drug trade is protected in many countries because it provides valuable foreign currency for their interest payments. And the United States is losing out on future markets of hundreds of millions of people that so far remain unable to afford basic schooling, much less to buy products made in America.

Jubilee 2000 has placed the issue of debt relief at the forefront of the international development agenda. The human consequences of poor countries’ debt burden have become a moral concern for millions of US citizens. Over the past two years, organizations and individuals across the country have sought to address this concern through study groups, worship services, local events, petition campaigns, letters to the editor and contacts with public officials. All this has brought the debt issue from almost total obscurity to the level of a national crusade.

Because of this pressure, last summer in Cologne, Germany, the leaders of the G-7 nations committed to expanding an existing debt-relief measure and insuring a focus on poverty reduction. President Clinton subsequently submitted a budget request to Congress that would provide almost $1 billion for the US share. Congress approved part of this request last November.

Creditors must take responsibility for being part of the cause for this crisis. During the cold war our government and other lenders loaned to many countries for purely political purposes. Loans went to corrupt leaders for no clear development purpose. Yes, debt relief comes at a cost to creditors, but perhaps this is a debt we owe as well. Additionally, because the United States expects to collect only a fraction of the value of the original loan, the debts can be written off at a significant discount. About $1 billion from the United States would leverage nearly $100 billion in debt relief for poor countries over the next four years.

It’s critically important that Congress appropriate more funding for debt relief, and soon. There is not enough money in the World Bank’s Highly Indebted Poor Countries Trust Fund to cover the countries eligible for debt relief this year. Several creditor nations’ pledges are contingent on the US contribution. In order to make sure that indebted countries don’t have to wait until October 2000 to start getting relief, President Clinton has asked Congress to include money for debt cancellation in its supplemental budget. He has also included a request in the FY2001 budget to cover the additional funds needed until FY2003. Approval of the full $810 million could bring debt relief to as many as thirty-three countries by 2003. The ideal would be both to expand this list and to deepen the level of debt cancellation, but fulfilling the commitments made in Cologne is a critical first step.

On March 30 the House passed a $12.7 billion emergency supplemental appropriation, with $7.7 billion more than the Administration requested. It included funding for Colombian drug wars, Kosovo peacekeeping, North Carolina flood relief and healthcare benefits for military personnel, but not a dime for debt relief. It does not look like debt relief will be in the Senate version, either. Some members of Congress have tried to explain this by questioning whether it is an emergency. Mozambique’s condition certainly refutes that interpretation.

Further distracting attention from debt relief is debate on the Congressionally appointed Meltzer commission’s recommendations for major changes to the IMF, World Bank and regional development-banking system. Congress’s focus on reforming the international financial architecture, while important, comes at the expense of attention to debt relief. We would remind Congress that one of the commission’s few unanimous recommendations was that debt cancellation for the world’s poorest countries by all the international financial institutions should be a priority. Eleven countries are expected to be eligible for debt relief within the next two months, but they won’t get anything until Congress appropriates its share of the package. The people who suffer the most from this delay are the most vulnerable people in the world–the victims of devastating floods in Mozambique, rural farmers in Uganda, schoolchildren in Bolivia.

Robert W. EdgarThe Rev. Dr. Robert W. Edgar is general secretary of the National Council of Churches, New York. An ordained United Methodist elder, he just concluded ten years as president of the Claremont School of Theology in Claremont, California. He served Pennsylvania's Seventh District in the US House of Representatives from 1975 to 1987.


Latest from the nation