Debt relief frees up funds for poverty reduction

The World Bank multilateral debt-relief initiative has slashed Uganda's external debt by almost 90 percent, which will allow the government to dedicate more resources to humanitarian programmes, according to the country’s finance minister. "The initiative has reduced our foreign debt of $4.5 billion to only $500 million through the highly indented poor countries initiative," said Ezra Suruma, Uganda's finance minister, on Thursday. "I am delighted that we shall now put additional resources into education and infrastructure development." It had cost the East African nation some $200 million to service this debt annually. By relaxing Uganda's debt, multilateral creditors - including the World Bank, the International Monetary Fund (IMF) and the African Development Bank (ADB) - had freed the country from the "debt trap", Suruma said. The relief is part of an initiative by the G-8 organisation of the world's wealthiest nations to ease the financial burden faced by the world's poorest nations. In April, the World Bank announced a move to cancel debts in Benin, Tanzania, Niger, Nicaragua, Mozambique, Mali, Rwanda, Senegal, Burkina Faso, Ethiopia, Ghana, Honduras, Madagascar, Uganda and Zambia. In May 2005, President Yoweri Museveni ordered his government to reduce its dependence on foreign aid and lashed out at "paternalist" donors, some of whom had cut aid to the country because of concerns about governance and democracy. Museveni, who has been in power since 1986, demanded that wealthy nations stop pinning assistance on democratic reforms. He warned that Uganda would forsake such aid if donors continued to impose conditions.