Debt Relief
...countries cannot even afford to pay the interest alone on these loans, so how are they ever going to get out of debt? For countries that have endured decades of severe indebtedness, poverty, and subordination to the international financial institutions (IFIs) economic policies, comprehensive cancellation of their outstanding debt is necessary if their people are ever going to gain democratic control of their economic destiny (Ambrose, November 2001). Part of that cancellation should consider the legitimacy of the current debt. Debts that were incurred for failed economic programs and non-performing transportation projects should be annulled. A 1992 World Bank report, “Effective Implementation“, estimated 37.5 percent of World Bank projects would be so classified (World Bank, 1992). President Clinton said, “I don’t think we can, in good conscience, say we support the idea that they should choose between making interest payments on their debt and investing in their children’s education,” announcing his plan to relieve one-hundred percent of foreign debt. At an April 23, 2001 press conference in Washington D.C. the deputy director of the IMF Policy and Development Review Department, Masood Ahmed, said the agencies have considered one-hundred percent debt relief and found it impossible for three reasons. First, it would not be fair to the poorer countries because the average debts of those countries once the countries have completed the HIPC initiative will match the average of poor countries that do not qualify for HIPC. Second, to include all the poor countries in debt reduction, the two groups would have to cut lending amounts because they are dependant on loan repayments for income. Finally, Ahmed argued, setting aside the large sums of money for debt forgiveness would cripple the IMF and the World Bank and force them to cancel their support for middle- and low-income countries (Salt of the Earth, May 2001). It is true that if all the debt were forgiven then the United States would not have the funds to help other countries in their time of need, but if they did not owe the US money, then they would not need as much money. With the $60 million average repaid daily, those in debt countries could spend that money on poverty reduction and health care. Each day that the Group of seven delays, 8,000 people dies due to HIV/AIDS, and 30,000 people die of preventable diseases, according to Jubilee USA. Critics are skeptical arguing that the forgiveness of the loans would divert money from foreign aid budgets, further hurting developing countries who have conscientiously repaid their loans (Issues and Controversies, February 16, 2001). How can this hurt them? If you were given extra money, does it in any way hurt y...