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Debt Action Sheet
"The leaders of rich nations should look to the Bible for
inspiration. Every 50 years you make a new beginning - this is the Jubilee principle in
the book of Leviticus. You cancel any debts still owed; if there are slaves, you set them
free - it is a chance for renewal for everybody."
Archbishop Desmond Tutu
FACT
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Did you know that for every �1 the industrialised
world donates in aid to the Third World, it receives �3 back in debt repayments.
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As part of its campaign for the millennium,
Fair Deal for the Poor, CAFOD is calling for a one-off cancellation of debt for the
poorest Third World countries.
What do you mean by "the poorest"?
Countries with a Gross Domestic Product (GDP) of less than US$2,000
(�1,218) per person per year.
Which countries might be included?
Countries such as Angola, Ethiopia, Haiti, Nicaragua, the Philippines and
Bangladesh. In all, some 47 countries should qualify. (See the Campaign Briefing for a
full list.)
When did this debt problem start?
The seeds of the most recent debt crisis were sown in the 1970s when
money was loaned to Third World countries at extremely low interest rates. But people
began to talk of a crisis at the beginning of the 1980s when interest rates rose sharply
and repayments became very expensive.
To pay the interest on their debts, countries have to export what they
grow or make. Most Third World countries depend on just two or three export crops or raw
materials such as coffee, sugar, copper and cotton. At the same time as interests rates
were rising, the price of these products on the world market was falling. The price of
coffee, for example, fell from �3,000 a ton in 1976 to �600 in 1986.
How much is the Third World Paying?
In 1996 poor countries are paying almost �330 million interest on their
debt every day to the banks, governments and financial institutions of the North.
What effect is this having on Third World people?
Since the 1980s the World Bank and the International Monetary Fund (IMF)
have made new loans only if countries implement Structural Adjustment Programmes (SAPs).
What on earth are SAPs?
SAPs are economic measures designed to help countries compete in today's
global market-place.
Nothing wrong with that, surely?
SAPs were introduced so that indebted countries would be able to pay back
their debts by making themselves more efficient and competitive. The measures include:
privatising state-owned companies, devaluing currency, removing trade tariffs, increasing
exports, encouraging foreign investment, raising interest rates and cutting public
spending.
What have SAPs got to do with Fair Deal for the Poor?
In order to cut public spending, many indebted countries have introduced
charges for education, forcing poor children to drop out of school. Privatisation of
state-run industries has led to massive job losses. Devaluation of currencies has caused
the prices of essential imports such as oil and medicines to rise. High local interest
rates have made it impossible for poor farmers to get credit to buy seed and fertilisers.
CAFOD's partners in Nicaragua report a dramatic increase in the number of
children working on the streets since the introduction of SAPs. Their parents simply
cannot afford to send them to school and need their earnings to help the family make ends
meet. "Once out of the school system they often never go back," says Daniel
Hopewell who runs an education project for street children in Nicaragua. "They start
working and that's it."
CAFOD believes that, instead of seeing these effects on the poor as an
unfortunate social side effect, the World Bank and IMF should put poverty alleviation at
the centre of its structural adjustment policies.
"The IMF and World Bank tell us to privatise, but most of our
schools are already in private hands. They tell us to cut back on government jobs, but
with 70 per cent unemployment the government needs to be able to create jobs. They are not
interested in the life of the people, but in how the budget is balanced."
Claudette Werleigh, CAFOD partner and former Prime Minister of Haiti.
What can we do?
CAFOD is calling for a one-off remission of unpayable debt for the
poorest countries by the first year of the new millennium. Together with other Christian
agencies, CAFOD will be delivering a massive petition to the world's leaders in June 1999.
"The debt burden is a major factor in perpetuating poverty.
Development has been halted and reversed by the debt service obligations of some of the
poorest countries to their foreign creditors... The major industrial countries and the
international institutions they largely control need to act in solidarity with the poorer
countries to achieve an outcome based on justice."
The Common Good, statement by the Bishops' Conference of England and
Wales, 1996.
What can I do?
If you don't already have one, send for a copy of the petition, sign it
and ask all your friends, family, neighbours and people in your parish to sign it too.
Then return it to CAFOD. (Copies available from CAFOD's Campaign Office, tel 0171 733
7900.)
ADDITIONAL RESOURCES
Other resources are available to help you and/or your group find out
more:
 | background briefing paper
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| action sheets
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| liturgy resource book
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| campaign video
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| slide show and talk by your CAFOD Regional Organiser
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For more information call CAFOD Campaigns 0171 733 7900
or e-mail: [email protected]
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