Statement of Poul Nyrup Rasmussen, PES President on the cancellation of the debt  of poorest countries: “A big step forward, but a “Global New Deal” is needed! ”

16 June 2005

The finance ministers from the world's wealthiest nations agreed to write off the debts owed by the world's poorest nations to the World Bank, the IMF and the African Development Bank in London, on 11th June 2005. The decision was taken before the G8 summit, July 6-8, in Gleneagles, Scotland under the UK Presidency following Prime Minister Tony Blair’s initiative to give the priority to the development of southern countries and Africa in particular.

Poul Nyrup Rasmussen, PES President, said: ”The deal will spare a total of between $1.5 billion to $2 billion a year in debt repayments. It should improve the lives of millions of people and be invested in concrete projects in term of education, health services and fight against HIV/AIDS”.

The 18 countries (15 of which are in Africa - Benin, Burkina Faso, Ethiopia, Ghana, Madagascar, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania, Uganda and Zambia - plus Bolivia, Guyana and Honduras), have completed the Heavily Indebted Poor Countries (HIPC) initiative, and owed about $40 billion to the World Bank, the International Monetary Fund and the African Development Bank (AfDB). The G7 ministers (the G8 minus Russia) also announced that nine more countries (Burundi, Central African Republic, Comoros, Republic of Congo, Cote d'Ivoire, Liberia, Somalia, Sudan and Togo) could reach the HIPC completion point in the next 12 to 18 months, qualifying them for the same relief. It would bring the total package to more than $55 billion. In total, the debts of African countries alone stood at over $300 billion.

Beyond the discussion around the conditions that the poorest countries must comply with under the HIPC Initiative (that impose damaging conditions requiring liberalisation and privatisation), there is a serious concern about the timeline.

The PES President added: “It is a big step forward but we need a New Deal. Unfortunately it is not sufficient. In total 42 countries are part of the Heavily Indebted Poor Countries (HIPC) initiative. Their debts have to be written off as well, without delay”.

The Party of European Socialists emphasises the need for a “Global New Deal” for relations between rich and poor countries:

• Doubling Official Development Assistance (ODA);
• Creation of new instruments to finance development;
• Better regulation of world trade and the achievement of a real round for development in the WTO.