U.S. Full Funding for International Debt Relief for Poor Countries |
Fact Sheet, Released by the White House
Washington, DC, October 2, 2000
Today, in a White House meeting with a diverse group of religious leaders and Members of Congress, President Clinton will call on Congress to fully fund and authorize his international debt relief budget request. Citing unsustainable debt as a factor that is helping to keep many countries -- in poverty, the President will continue to urge accelerated efforts against global poverty that leaves over a billion people to survive on less than $1 a day. The President will emphasize that, under the Cologne Debt Initiative, the G-7/G-8 countries' savings from debt relief would be directed to education, health care, AIDS prevention, and other critical needs. Because other creditors are waiting to see whether the U.S. funds its contribution, he will warn that international implementation of the crucial initiative is likely to stall early next year if Congress fails to appropriate $435 million and fully authorize the use of income from IMF gold sales for debt relief.
President Clinton Will Be Joined in Today's White House Meeting by Key Religious Leaders, Members of Congress and Others to Urge Debt Relief
Joining the President in urging the passage of the full debt relief request will be key Members of Congress: Rep. John Kasich (R-OH), Rep. Nancy Pelosi (D-CA), Rep. Spencer Bachus (R-AL), Rep. John LaFalce (D-NY), Rep. Maxine Waters (D-CA), Rep. Jim Leach (R-IA); Sen. Patrick Leahy (D-VT), Sen. Mike DeWine (R-OH), Sen. Joseph Biden (D-DE), Sen. Richard Lugar (R-IN), Sen. Connie Mack (R-FL), and key religious leaders: Archbishop Theodore McCarrick, U.S. Catholic Conference; Dr. M. G. "Pat" Robertson; Rev. David Beckmann, Bread for the World; Rabbi David Saperstein, Religious Action Center; Bruce Wilkinson, Senior Vice President, World Vision; Rev. Dr. Andy Young, President, National Council of Churches; Right Rev. Arthur Williams, Jr., Vice President of House of Bishops -- Episcopal Church (Diocese of Ohio in Cleveland); and the musician Bono.
The President's Budget Requests $435 Million to Fund America's International Obligation as Part of the Cologne Debt Relief Initiative
Last fall, Congress approved only $110 million of the $920 million the President requested over four years to cover the cost of U.S. participation in the expanded international debt relief efforts launched at the Cologne G-7/G-8 Summit. As a result, this year he has requested $435 million and additional authorization for the use of IMF gold sale investment proceeds to finance debt relief. Already, Bolivia and Honduras are seeing their debt relief packages stalled because of inaction by the U.S. Congress on the President's request. The House this summer took a step in the right direction by approving an amendment offered by Rep. Waters to the Foreign Operations Appropriations bill to provide $225 million; the Senate has included only $75 million in its bill, however. The President's full request ($435 million and gold authorization) is what is needed to keep implementation of the program from stalling out next year.
The U.S. Has Been an International Leader on Debt Relief for Developing Nations
In March 1999, President Clinton presented a plan to a U.S.-Africa Summit in Washington that became the basis for the G-7 agreement in Cologne, Germany (known as the Cologne Debt Initiative) to triple the amount of debt relief available for poor countries, reducing their debt by about 70% or $90 billion -- from an estimated $127 billion to as low as $37 billion -- in return for firm commitments to channel the benefits into improving the lives of all their people. Building on that agreement, last September, the President announced that the U.S. would unilaterally exceed the terms of the G-7 initiative and entirely cancel the $5.7 billion in U.S. government debt owed by qualifying countries. The Cologne Debt Initiative called for only 90% debt reduction for certain types of bilateral debt. In addition, the U.S. has supported efforts to expedite the process of qualifying countries for the expanded Heavily Indebted Poor Country (HIPC) program. International Debt Relief Will Help Free Up Scarce Resources for Health and Education in Developing Nations
For the average HIPC country, the share of scarce government revenue devoted to debt service (primarily interest payments) could fall by 25 percent to 50 percent if countries comply with their obligation to pursue economic reforms and promote poverty reduction. For example, Mozambique's debt is expected to be reduced by over $4 billion, which could cut in half the share of government revenues allocated to external debt service, and free about $100 million in budgetary resources each year. These savings are equivalent to double the health budget in 1998 in a country where children are more than 3 times as likely to die before the age of five as they are to go to secondary school. In Uganda, enhanced debt reduction could allow health and education spending to increase by 50% from 1998 to 2001 and rural development expenditures to more than double.
As many as 33 Heavily Indebted Poor Countries Representing 430 Million People Could Ultimately Be Affected
The 33 countries that could potentially benefit from debt relief are Honduras, Mauritania, Nicaragua, Tanzania, Benin, Bolivia, Burkina Faso, Cote d'Ivoire, Guyana, Mali, Mozambique, Senegal, Uganda, Cameroon, Chad, Republic of Congo, Ethiopia, Ghana, Guinea, Guinea-Bissau, Laos, Madagascar, Malawi, Niger, Rwanda, Sierra Leone, Togo, Zambia, Central African Republic, Burundi, Congo DR, Sao Tome, and The Gambia. Ten Countries Have Qualified for Expanded Debt Relief So Far .
These are Benin, Bolivia, Burkina Faso, Guyana, Honduras, Mali, Mauritania, Mozambique, Senegal, Tanzania, and Uganda. Another ten could qualify by the end of 2000 -- Cameroon, Chad, The Gambia, Guinea, Guyana, Guinea-Bissau, Malawi, Nicaragua, Rwanda, and Zambia. That is the expectation set by the G-8 with U.S. support at the July Okinawa Summit. The majority of the remaining HIPCs have not made progress toward qualifying because of their engagement in conflict. Others have been slow to develop their poverty reduction strategies, which are necessary to ensure that the savings from debt relief go toward productive investments to reduce poverty, like basic education and health care, rather than military spending. Still others have not requested the extra debt relief.
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