International Pressure Grows on US Government to Provide Debt Relief for the World's Poor

Posted: 15 December 2004

WASHINGTON, DC—As the United States prepares to hand over the presidency of the G8 to Britain next year it is coming under increasing pressure to help ease the plight of the world's poorest citizens.

The next nudge is likely to come tomorrow, when Treasury Secretary John Snow hosts a meeting in Washington with his British counterpart, Chancellor Gordon Brown. Brown is expected to urge the US government to provide resources to allow total cancellation of the debts of the world's poorest countries, applying the strongest pressure yet from Britain for firm commitments from the Bush administration on increased aid and debt relief in 2005.

Brown said earlier this week that the US and Britain must move further to help developing nations, and that he is "optimistic" that the US will support 100 percent cancellation of debts owed to the World Bank and IMF by the poorest countries. In particular Brown has been very supportive of using the undervalued gold reserves of the IMF to finance further moves towards debt cancellation.

International agency Oxfam's new report Paying the Price shows that the US, Italy, and Japan are among the stingiest donors of foreign aid—a mere 0.14 percent of national income in the case of the US.

Meanwhile, 45 million children will die needlessly before 2015, Oxfam's research shows, and G8 country aid budgets are half their 1960 levels. Every day, poor countries are paying a staggering $100 million in debt repayments.

Oxfam policy advisor Max Lawson said the US must now make good on the promises it made at October's World Bank and IMF annual meetings to cut debt.

The decision to cancel $29 billion of Iraqi debt was more than all the debt relief so far given to the 41 countries in the five years of the Highly Indebted Poor Country (HIPC) initiative. Iraq shows it is clear that when the leaders of the rich world want to they can easily find the resources to cancel debt.

"Now is the time for the US to produce its checkbook and really work with G8 countries to deliver debt relief for the world's poor," Max Lawson said.

"2005 offers the chance for an historic breakthrough on poverty, but unless world leaders act now the year will end in shameful failure," he said.

Oxfam's report said that, although the G8 nations agreed in 1970 to spend 0.7% of their incomes on aid, none of the G8 members have reached this target. Britain announced in December it would reach the target by 2013, yet the US won't reach the aid target needed to halve world poverty until 2040.

"In Zambia, where millions of girls and boys are unable to attend school, the government will spend $150 million dollars more this year on repaying debt than on education. If Snow and Brown really wanted to, they could easily bring an end to this inexcusable situation," said Lawson.