December 19, 2000, Article on Canada's Bilateral Debt
Canada cuts debt of poorest countries
Third World owes up to $1-billion
The Globe and Mail
Tuesday, 19 December, 2000
OTTAWA -- Finance Minister Paul Martin is expected to announce a moratorium today on debt payments to Canada from some of the world's poorest countries. The move puts Canada at the leading edge of an international initiative to forgive all debt owed by severely impoverished nations.
Canada is owed about $1-billion by what the World Bank and the International Monetary Fund have deemed to be the world's most heavily indebted poor countries. The announcement today will let most of Canada's poorest debtors off the hook for interest payments until the IMF, World Bank and creditor countries work out a permanent plan to forgive the countries' debts completely, federal sources say.
"If Canada is announcing a debt moratorium, this is an important example for all creditors of the poorest countries," Pamela Foster, co-ordinator of the Halifax Initiative Coalition, said yesterday. "The hands of the poor countries remain tied until the bigger creditors than Canada, namely the World Bank and the IMF, recognize that these debts are uncollectable."
About 17 countries are on Canada's list of poor debtors, but not all of them will be able to benefit from today's moratorium. Countries such as the Democratic Republic of Congo, Liberia, Sudan and Ivory Coast still have too many human-rights problems to be admitted to the club.
The announcement probably won't cost Canada very much. Since many of the world's poorest countries are not servicing their bilateral debts anyway, Ottawa has not been collecting very much interest on its $1-billion in loans.
Mr. Martin has frequently criticized creditor countries, especially the Group of Seven industrialized nations, for being too slow and too demanding in their plans to wipe out the debt loads of the poorest countries on Earth. Creditors decided five years ago to target 37 countries that were so poor they could not sustain their debt loads. But so many strings were attached to the plan that none of the countries has made significant progress through the system.
Debt-relief candidates must produce complex antipoverty blueprints that include plans for schools, health programs and rural development. The requirements are supposed to make sure poor countries don't divert extra money to useless or corrupt purposes. But the antipoverty plans demanded so much time and money from impoverished and troubled administrations that applicants found it hard to qualify for even the initial stages of debt forgiveness.
So, in September, during the World Bank and IMF meetings in Prague, Mr. Martin went out on a limb and publicly requested that all creditor countries immediately place moratoriums on debt payments from poor countries that looked as though they would eventually qualify for debt forgiveness.
Until today, however, Mr. Martin stopped short of actually following his own advice.
And, while Mr. Martin was the first to suggest a moratorium on debt payments, he was not the first to act. On Dec. 1, Britain announced that all debt payments from 41 of the world's poorest countries would be stopped or held in trust until the day when the money can be used for poverty reduction.
Mr. Martin was not popular when he publicly asked others to join his initiative. The United States, among others, felt he should have lobbied behind closed doors. The United States has always taken a much harder line than Canada on debt forgiveness. The U.S. approach is expected to be even [slightly] harsher now with the election of George W. Bush as president.
The timing of today's announcement is important. A church-led, international network of activists, Jubilee 2000, has led a high-profile campaign for years, urging rich countries to forgive all debt to the poor by end of 2000.
In September, Mr. Martin met with Bono, the lead singer for the Irish rock band U2 and the chairman of Jubilee 2000. Bono urged Canada and other creditor nations to do something meaningful for the new millenium, not spend riches on lavish Year 2000 celebrations.
While Mr. Martin's announcement today will not wipe out any debt owed to Canada, it does make a significant gesture toward alleviating the debt-servicing burden on many poor countries, sources said.
As of September, 2000, 17 of the world's poorest countries owed Canada about $1-billion. These countries are: Benin, Bolivia, Cameroon, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Senegal, Tanzania, Zambia, Congo, Ivory Coast, Democratic Republic of Congo, Liberia, Rwanda and Sudan.