Anti-debt campaigners scored a victory at the weekend as finance ministers from the world's richest countries announced the immediate cancellation of 100 percent of foreign debt owed by some of the world's poorest nations.
The deal struck by the Group of Eight (G8) industrialised countries in London on Saturday covers US $40 billion of debts owed by 18 poor countries to the World Bank, the International Monetary Fund and the African Development Bank. Nine more countries are expected to qualify within 18 months, taking the total cost to about US $100 billion.
Fourteen African countries qualified because they had reached the Heavily Indebted Poor Countries (HIPC) completion point.
The British relief agency, Oxfam, welcomed the agreement but said it did not go far enough, pointing out that the cancellation only covered between 10 and 20 percent of what was required and did not extend to all the countries needing it.
"This is a positive step forward but debt cancellation is just part of what needs to be done. We call on the G8 leaders to also increase aid to these countries, without which many poor countries are unlikely to escape chronic poverty," Oxfam spokesperson Harriet Binet told IRIN.
She said an additional $50 billion in aid was needed to achieve the United Nations Millennium Development Goals (MDGs), which call for the number of people living on less than a dollar a day to be halved by 2015.
Greater effort should also be directed towards dismantling international trade barriers, which disadvantaged producers in underdeveloped countries, she added.
Oxfam has argued that while rich-country members of the World Trade Organisation heavily subsidised their own domestic producers, they forced developing countries to open their markets and slash tariffs that would have protected their farmers. World Bank figures suggest that giving developing countries greater access to rich markets could earn them about $150 billion a year.
"Poorer countries would rather trade themselves out of poverty than rely on handouts. It is therefore critical that trade injustices are immediately addressed by industrialised countries," Binet pointed out.
The UK-based Jubilee Debt Campaign said in statement that around 60 countries needed total debt cancellation - far more than the 18 currently getting it. Multilateral debt cancellation for these countries would release over $10 billion per year for poverty reduction, rather than the $1 to $2 billion under the current initiative.
Meanwhile, some debt experts have said cancellation will not work without African governments showing increased fiscal discipline.
"The major challenge now is to put in place systems that are accountable, transparent and render themselves to public scrutiny. African leaders must ensure that detailed information is made available to civil society, in order to closely monitor how the funds are spent," said Jack Jones Zulu, an economic policy analyst with Jubilee-Zambia.
He added that savings should be used for the improvement of social service delivery rather than lining the pockets of corrupt government officials.
Zambia, which currently spends around seven percent of GDP on debt, is among the 18 countries eligible for the debt writeoff. According to news reports, the World Bank is expected to draw up new rules on transparency to ensure the money goes where it was intended.
The other countries qualifying for immediate debt cancellation are Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania, Uganda and Zambia.
This article was produced by IRIN News while it was part of the United Nations Office for the Coordination of Humanitarian Affairs. Please send queries on copyright or liability to the UN. For more information: https://shop.un.org/rights-permissions