12 January 2005

Debt must not stand in the way of recovery

The donor nations meeting in Paris today must not only suspend all debt repayments from tsunami-affected countries, but go further and cancel a substantial proportion of the debts permanently, Oxfam said today. Any cancellation or moratorium should only have one condition; that it is spent transparently on poverty reduction and reconstruction.

The ‘Paris Club’ of rich country creditors is gathering today to decide what to do about the huge debts owed to them by the countries devastated by the Tsunami.

These debts are massive. To give an idea of the scale of the repayments they require; With just one day’s debt repayments, Indonesia could instead afford 100 desperately needed aid flights. With a month’s debt repayments they could pay for three thousand flights. India could help provide 18 million people with emergency clean drinking water with just one day’s repayments.

Oxfam is today calling on rich countries in the ‘Paris Club’ to not only suspend debt repayments immediately but to also commence an independent and transparent assessment of what is a sustainable debt burden for the tsunami-affected countries and cancel debt above this level.

“The countries affected by the tsunami need significant amounts of debt cancelled rather than simply postponed, so that they can invest in reconstruction and poverty reduction. Only then will they be able to build a better future rather than simply rebuilding the poverty of the past,” said Barry Coates, Oxfam New Zealand’s Executive Director.

“The tsunami has highlighted the pernicious impact of debt on poor countries. But it’s not only these countries that need debt cancellation. Debt repayments contribute to the global poverty that is killing more people than this tsunami every week.”

Coates also stressed that debt relief for tsunami-affected countries must not come at the cost of providing debt relief for other poor countries. Cancellation of unpayable debts for all the poorest countries is essential as a vital step to achieving poverty reduction and the Millennium Development Goals. The poorest countries pay $100 million dollars a day to rich countries in debt repayments, vital resources that should be used instead for development and poverty reduction.

ENDS

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