Letter: Debt relief needed

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The Independent Culture
Sir: Diane Coyle is wrong ("Ignore the hysteria over debt", 11 November). High levels of debt are related to Central America's vulnerability to disaster. Hondurans are diverting 80 per cent of government revenues to foreign creditors, revenues that should go to infrastructure, health and sanitation.

The Jubilee 2000 Coalition is not exploiting death and hardship. We are responding to a direct appeal for debt relief from Archbishop Rodriguez and other leading Hondurans. If the Rio Chico had not burst its banks, I would have been in Tegucigalpa for the launch of the Latin America-wide Jubilee 2000 campaign. Ms Coyle argues that Nicaragua and Honduras have received more "flows" from the West than they have paid in interest. "Flows" is standard IMF jargon for new lending and grant aid. Ms Coyle compares this to a salary coming in and a mortgage going out. But a salary is income, not borrowing. Taking new loans to pay off old loans, when your house has blown down, is reckless. If you lose your job, taking new loans would be calamitous. But this is standard IMF advice to poor, effectively bankrupt countries, which rely on income from single commodities to repay debts. For the last decade, egged on by Western leaders, they have poured new, cheaper loans into indebted countries. This has made matters worse.

Ms Coyle is clearly unaware of the miserly relief offered by the New World Bank/IMF plan (HIPC). If Honduras and Nicaragua get the same deal as agreed recently for post-conflict Mozambique, then they will remain in debt bondage for some time.

But Ms Coyle is right about one thing: we need further informed debate. That is why 40 countries are sending delegates to an international Jubilee 2000 conference on debt in Rome this week. The debate will centre on the speed, depth and terms of debt relief. But in contrast to Western debates, these debates will be led by Mozambicans, Hondurans and Nicaraguans.

ANN PETTIFOR

Director Jubilee 2000 Coalition

London SE1

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