International Debt

The Principles

1. Every human person has the right to the basic necessities that make for a decent human life.

2. The world has sufficient resources to meet every person's need, but not every person's greed.

3. International creditors as well as debtors share responsibility for the present debt crisis and for resolving it.

4. Determining rates and conditions for payment of debt by 'bankrupt' countries should not be left to creditors.

5. Debts owing to commercial bodies, as well as those owing to governments, to the International Monetary Fund (IMF), and to the World Bank, are included in the agenda of the Drop the Debt campaign.

6. The campaign's goal is a one-off cancellation, setting no precedent for future loans.

7. Any future loan transactions should be subject to the principles of transparency and accountability, accepted by both parties.

The Issues

1. Some indebted countries have already paid their debt many times over but are still held to be in debt.

2. It can be shown that some of the original loans were fraudulent. The rich nations got the loans, the poor nations got the debts.

3. Dire poverty related to debt payments has had disastrous effects on health and nutrition, education, the environment, life-expectancy rates, infant mortality rates in debtor nations. It is estimated that 7 million children are dying annually from preventable diseases.

4. Every day the world's richest nations are receiving $60 million dollars from the poorest nations in debt servicing.

5. Some of the conditions imposed by the IMF are causing social suffering and political instability.

6. The Heavily Indebted Poor Countries (HIPC) scheme for debt reduction is failing. It excludes too many nations and provides too little for those who are included. On average, for the 22 countries in line for relief, the reduction in debt service will be just over one third - not nearly enough to make any real difference.

7. Some countries, Zambia among them, will actually face increased payments after meeting the conditions for inclusion in the scheme. The costs for countries struggling to meet HIPC conditions continue to consume funds needed for health, education, other social services and infrastructure.

8. Some countries regarded as ineligible for debt relief under the HIPC scheme have severe problems of poverty. Among them, Nepal, Bangladesh, the Philippines together owe Australia $270 million. These debts are regarded by Jubilee Australia as unpayable.

9. Vietnam owes Australia $60 million. It is included in the HIPC scheme but Australia has not moved to cancel the debt.

10. The HIPC initiative is designed by creditors and controlled by creditors. Their own political wrangling, conflicting agendas and minimising of costs to themselves become the dominant issues, not the delivery of debt cancellation to those most in need.

11. The World Bank and the IMF have not been held sufficiently accountable for decisions made about poor country debt.

12. Australia's statement that the debts of Nicaragua and Ethiopia would be cancelled is ambiguous. In fact while debt relief for Ethiopia remains tied to HIPC Australia will collect $2 million a year from that country. Australia has set a moratorium on Nicaragua's $6.3 million debt until it satisfies HIPC conditions, at which time full cancellation would occur. It is still possible for Australia to begin re-collecting debt payments from Nicaragua if it fails to meet the HIPC conditions.

Alternatives

1. Australia could immediately stop taking debt repayments from Nepal, Philippines, Bangladesh, whose debts are regarded as unpayable. The sums owed are crippling for them as debtors but not for us as creditors.

2. If there are doubts that the money saved would be directed to constructive initiatives to reduce poverty it could be placed in trust funds.

3. Nicaragua's debt to us could be cancelled immediately rather than when, if ever, it meets HIPC conditions.

4. Since Vietnam is already included in the HIPC scheme, Australia could at least declare a moratorium on repayments, as with Nicaragua.

5. With a permanent seat on the World Bank Board, as the fifth largest shareholder in the Asia Development Bank and a member of the Paris Club of creditor nations, Australia is in a position to lobby for:

a) Access to debt cancellation for poor countries now excluded from the HIPC list, such as Nigeria and Haiti.

b) Cancellation of 100% of the debt of the poorest countries by World Bank, IMF and creditor nations, as a necessary first step to their social and economic recovery.

c) Establishment of a new transparent, democratic mechanism to set ethical guidelines for future international loan transactions to help ensure that the debt crisis is not repeated.

d) An international agreement to hold the World Bank, the IMF, lending nations and commercial lenders accountable to relevant United Nations bodies responsible for upholding human rights.