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NZ must seize golden opportunity to drop the debt

27 September

NZ must seize golden opportunity to drop the debt

New Zealand has an important role to play in a historic opportunity to provide a fresh start for the world’s poor. Since the 1970s, a mountain of unpayable debt has trapped the world’s poorest countries in a cycle of debt and poverty. Finally, after decades of half measures, Britain’s Chancellor of the Exchequer Gordon Brown has broken ranks and committed to cancel the share of the multilateral debts owed to Britain.

Today, Oxfam New Zealand has called on Dr Michael Cullen as Minister of Finance to back this proposal, which would be financed partly from government funds and partly from revaluation of IMF gold reserves. The reserves are currently grossly under-valued at around one-fifth of the market price for gold of US$400 per ounce. Revaluing IMF reserves would release up to US$32billion according to Oxfam calculations.

The Executive Director of Oxfam New Zealand, Barry Coates today said: “The international Jubilee campaign gathered the largest ever petition, 24 million signatures, to end the debt crisis. The response has been too little debt cancellation, too slowly, with too many strings attached. The debt crisis has dragged on and millions of people, predominantly children, have died because of inaction. At least eleven countries, including Ghana, Malawi, Uganda and Zambia continue to spend more on paying back debt than they do on basic heath care.

For example, average life expectancy in Ethiopia is 47 years, and the country’s infant, child and maternal mortality rates are among the highest in the world. Yet the debt burden means that the government spends more of debt repayment to rich countries (US$76.5 million) than on health care (US$73 million).

Coates said: “It is decision time for New Zealand. Gordon Brown has said that Britain will cancel its share of debts owed by the poorest countries to the multilateral banks, primarily the World Bank and IMF. New Zealand must also do its share.

“So far, New Zealand has paid $6.4 million into the Heavily Indebted Poor Countries (HIPC) initiative trust fund, the principal mechanism used for reducing debt. While details of the British proposal have not yet been released, the bill for New Zealand to match Britain’s commitment is likely to be in the order of NZ$15 million. There is little else that we as a nation could spend our money on that would have such a profound impact on relieving poverty and suffering in the world.

“Repeated studies have warned that the poorest countries will not meet the targets for poverty reduction in the Millennium Development Goals without new finance and without debt cancellation. New Zealand is lagging behind with its aid levels and is now one of the lowest donors, as a proportion of national income. This is an opportunity to be more generous on debt.”

“The Jubilee campaign has attracted significant support from kiwis - around 64,000 New Zealanders signed the Jubilee petition for an end to the debt crisis. Now it is time to deliver.” ENDS Notes for Editors: The toll of preventable deaths rises daily. Over the past year alone, an estimated 2,169,000 children have died from diseases that could have been prevented through vaccination. One child dies every 15 seconds from a lack of safe water and sanitation.

The British proposal includes not only the most heavily indebted poor countries but would extend to all of the poor countries. This would mean debt service reductions for the International Development Assistance (IDA) eligible countries deemed eligible for direct budget support. The British proposal comes in the build up to the IMF and World Bank Annual Meetings, to be held in Washington DC, next weekend (2-3 October). In the absence of Australia’s Paul Costello from the IMF and World Bank meetings, Michael Cullen will be making a speech to the World Bank Development Committee.

ENDS

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