Debt stunting development, Mkapa tells UN Assembly

Tanzania's current debt stock and service requirements made it "impossible to attain the goal of eradicating poverty and accelerating the development process", President Benjamin Mkapa told the UN General Assembly meeting in New York this week. Tanzania's debt service ratio (as a percentage of revenue from goods and services) was about 35 percent, compared to the acceptable range for countries in the Highly-Indebted Poor Countries (HIPC) initiative of 20-25 percent, a UN statement quoted Mkapa as saying. The Tanzanian president also appealed for donor support of Tanzania's Multilateral Debt Relief Fund (MDF), through which, he said, it sought to direct savings on debt servicing to poverty reducing activities in education, health and water services. "We have shown that it is possible to link debt relief directly to poverty eradication initiatives in a transparent and accountable manner that involves government, civil society and donor countries", he added. The World Bank last week endorsed Tanzania's admission to the HIPC initiative, under which it could receive debt relief of up to 80 percent, AFP reported. The exact amount of debt reduction - Tanzania's external debt currently stands at around US $8 billion - would be determined during a World Bank mission to establish HIPC terms later this year, but Tanzania was also expected to benefit significantly from resource allocation for development under the HIPC scheme, AFP added.