8/2/2002
Debt Cancellation Crucial to Meeting Millennium Targets, Say Campaigners

The 2015 Millennium Development Goal of halving the number of people in extreme poverty, will not be met without total cancellation of the debts of the world's poorest and most indebted countries, say debt campaigners.

This is the stark conclusion of a new study by Jubilee Research at the New Economics Foundation and jointly published with the Jubilee Debt Campaign, the UK successors to Jubilee 2000. Using widely accepted methodologies, the study concludes that the vast majority of poor countries that are heavily indebted, will need a complete write off of their debts, plus an increase in aid from the current level of $15bn to $46bn a year, if the poverty target is to be met.

Unless accompanied by wholesale debt cancellation, increased aid flows will only result in new aid being squandered on debt repayments, say the campaigners. This will leave the drive to achieve the Millennium Development Goals seriously undermined.

Author of the report Romilly Greenhill says the study used widely accepted economic models to show the necessity of total debt cancellation. "The continued squandering of precious resources on debt repayments is making a mockery of the international community's stated commitment to improving the lives of the poor."

Stephen Rand of Tearfund and Chair of JDC said: "The debt campaign has never been about debt cancellation as an end in itself. It is based on the hard and harsh reality that poverty cannot be significantly reduced without it. The report demonstrates that JDC will continue to press the case for debt cancellation with vigour, commitment, and on the basis of fact."

The campaigners say that 52 of the world's poorest countries owe an unpayable historical debt to the rich world of over $300bn. Only about $18bn of this has so far been cancelled under debt relief initiatives with a total of $54bn of cancellation due to occur 'over time.' They are calling for 100% cancellation of this debt and warn of serious consequences if the findings of the report are not heeded. They are also calling upon G7 Finance Ministers to take radical action on debt if the promises for 2015 are to have any hope of being fulfilled.