Faith-Based Groups Call for Moratorium on $70 Billion South Asian Debt
More than 40 faith-based groups signed onto a letter calling on President Bush and Treasury Secretary John Snow to support complete debt consolidation for the regions affected by the earthquake tsunami
More than 40 faith-based groups signed onto a letter calling on President Bush and Treasury Secretary John Snow to support complete debt consolidation for the regions affected by the earthquake tsunami, Monday, January 10, 2005. The groups, including major Christian relief organizations such as the Church World Service, Lutheran World Relief, and major denominations such as the Presbyterian Church (USA), the Episcopal Church USA and the United Methodist Church, contended the “countries simply cannot be required to pay debts while facing a humanitarian disaster of such a magnitude.”
The debt-cancellation call comes only days before the Paris Club, an informal group of official creditors who finds sustainable solutions to debt repayment by developing countries, prepares to meet on Wednesday to discuss the debts of nations affected by the Tsunami.
The groups, led by the American Jewish World Service and Jubilee USA Network, call on the United States to press for a debt moratorium that includes both bilateral and multilateral debts owed to the International Monetary Fund, the World Bank and the Asian Development Bank. Moreover, the groups call for a complete debt cancellation for Sri Lanka, the Maldives, and Somalia, which would not hinge on the countries’ implementation of an IMF economic program.
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The following is the full text of the statement, as released on January 10, 2005.
January 10, 2005
President George W. Bush
White House
1600 Pennsylvania Ave., NW
Washington, DC 20500
Treasury Secretary John Snow
U.S. Treasury Department
1500 Pennsylvania Avenue NW
Washington, D.C. 20220
Dear President Bush and Secretary Snow:
In the days since the tsunami in the Indian ocean, the global community has come together like never before to offer emergency relief to those affected by this horrific tragedy. Now, as our government begins to plan for the long term reconstruction, we call on the United States Government to take strong action to address the debt crisis faced by nations in the region.
We feel strongly that, in addition to emergency relief and reconstruction aid, it is critical to address the external debt burden faced by these nations. Our nation’s financial assistance is much less effective as long as countries must recycle aid and loans back to our government and others through debt service payments. Moreover, debt cancellation is a highly effective form of delivering financial assistance to impoverished nations; unlike aid, debt cancellation is predictable (whereas aid levels change annually), and serves as direct budget support.
We are encouraged by preliminary reports that the Paris Club group of creditor nations has agreed to a moratorium on debt payments from affected countries. We urge the United States to clearly indicate its support of this proposal at the Paris Club’s upcoming January 12 meeting. These countries simply cannot be required to pay debts while facing a humanitarian disaster of such a magnitude.
Moreover, we urge the United States to exercise leadership within the G-7 and the Paris Club to make sure that the moratorium is not merely limited to payments of bilateral (Paris Club) debts. Affected countries owe more than $70 billion to the IMF, World Bank, and Asian Development Bank. Indonesia is expected to pay nearly $7 billion in debt service payments to multilateral creditors this year, which will greatly restrict its disaster relief capabilities. The moratorium must be extended to cover multilateral debts as well. Additionally, due to the emergency nature of the moratorium, we urge the United States to ensure that it not be conditioned on a country’s implementation of an IMF economic program.
It is clear that although the moratorium is a critical first step towards addressing the debt crisis in these countries, it is not alone sufficient. A moratorium is temporary; impoverished nations need definitive debt cancellation. In many of the impoverished countries affected, definitive debt cancellation was needed even before this terrible disaster struck. Discussions on extending up to 100% debt cancellation to impoverished nations are underway now within the G-7 and we are encouraged by the leadership role of the US government in these discussions. As the G-7 Finance Ministers prepare to meet on February 4-5 in London to consider measures for full multilateral debt cancellation, we urge the US government to support the inclusion of Tsunami-affected countries – Sri Lanka, Somalia, and the Maldives – among countries to receive full multilateral debt cancellation. We urge that such debt cancellation be implemented without harmful economic conditions.
Finally, we recognize that many grassroots organizations in the affected countries question the legitimacy of many of these debts, and have called for an inclusive international process to evaluate the debt. In Indonesia, for instance, lending during the Cold War was often made without proper oversight and lost to corruption, and thus was not used for the benefit of the Indonesian people.
In the face of this terrible tragedy we commend the United States for its response and urge the Administration to extend its leadership to address the critical debt burden of the affected nations.
Sincerely,
Advocacy Institute
Africa Action
American Friends Service Committee
American Medical Student Association
American Jewish World Service
Center of Concern
Church of the Brethren Witness/Washington Office
Church World Service
Conference of Major Superiors of Men
Denver Justice & Peace Committee
East Timor Action Network
The Episcopal Church, USA
50 Years Is Enough: U.S. Network for Global Economic Justice
Friends Committee on National Legislation
Global AIDS Alliance
Holy Cross International Justice Office
International Rescue Committee
Jubilee Missoula Network
Jubilee NW Coalition
Jubilee USA Network
Jubilee York, PA
Lutheran World Relief
Maryknoll AIDS Task Force
Maryknoll Office for Global Concerns
Medical Mission Sisters' Alliance for Justice
Mercy-USA for Aid and Development
Oxfam America
Pan African Children's Fund
PACT
Physicians for Human Rights
RESULTS
School Sisters of Notre Dame, Baltimore, Office of Justice & Peace
Sisters of the Holy Cross, Congregation Justice Committee, Notre Dame, Indiana
Student Global AIDS Campaign
Student Campaign for Child Survival
Unitarian Universalist Association of Congregations
United Methodist Church, General Board of Church and Society
Washington Office on Africa
Washington Office, Presbyterian Church, (USA)
The Well Project
Women’s International League for Peace and Freedom
