Palais des Nations, Geneva
As has long been recognized in this forum, if not elsewhere, unsustainable
foreign debt is a critical human rights issue. Insofar as the enjoyment of economic
and social rights and of the right to development is denied to millions of people
in heavily indebted developing countries as a result of crippling debt service
obligations, the continued enforcement of those obligations constitutes a massive
and systemic violation of human rights. Accordingly, we warmly welcome the appointment
last year of a Special Rapporteur on the effects of foreign debt on the full
enjoyment of economic, social and cultural rights, and only regret that the
Commission does not have before it a first analytical report on this issue at
this critical time.
In 1997, the United Nations Development Programme's Human Development Report declared that the Group of Seven and the Bretton Woods institutions should aim to end the debt crisis for the poorest countries by the year 2000. In that report it was calculated that, relieved of their annual debt repayments, the severely indebted countries could use the funds for investments that in Africa alone would save the lives of about 21 million children by the year 2000 and provide 90 million girls and women with access to basic education.
This cannot be said to be simply a problem of misapplication of national resources in the countries concerned - not when heavily indebted developing countries are typically required to expend 20 - 25% of export earnings on debt service payments before the international community recognizes the burden to be 'unsustainable'. An instructive comparison can be made with the terms of the London Agreement of 1953. At that time, a debt service to exports ratio of 3.5% to 6% was considered to be the maximum that could be paid without jeopardizing Germany's post-war economic reconstruction.
In its conception, the Heavily Indebted Poor Countries (111 PC) Initiative
of the World Bank and the IMF held good prospects for a comprehensive approach
to reduction of the unsustainable multilateral debt of those countries meeting
the criteria for entry into the scheme. However, [concerns about the restrictive
nature of those criteria have not been fully allayed by somewhat more liberal
criteria introduced in April 1997 for highly open economies with heavy fiscal
burdens of external debt despite strong efforts in mobilizing revenue.] The
success of the HIPC Initiative must be judged on its outcomes, rather than on
its prospects. The situations of three countries which have passed through the
HIPC process are important indicators.
Mozambique is one of the very poorest countries in the world. Only 30%
of the population has access to clean water; only 40% has access to health services;
only 24% of women can read and write. In June 1999, Mozambique will be due to
receive relief amounting to over half of its total external debt of $5 billion.
However, Mozambique has only been able to pay such a small proportion of its
scheduled debt service payments in the past that the practical effect of this
rigorous process seems likely to amount to little practical benefit for the
country. Deputy Finance and Planning Minister told parliament that "we conclude
that the HIPC initiative will not produce any significant impact on the volume
of future [debt service] payments." Debt service in the three years before
HIPC averaged $111 million per year; after HIPC it will average $100 million.
The Mozambican government has therefore joined those calling for 100% cancellation
of the debt.]
Uganda has one of the lowest life expectancy rates in the world. In 1994,
life expectancy at birth was estimated at 40.2 years. In 1996, Uganda spent
20% of its export earnings on debt service payments, and its debt service to
GNP ratio was 2.4% whilst health spending was a mere 1.6% of GDP - In the same
year, Uganda's external debt amounted to approximately $170 for every man, woman
and child, in a country in which over half the population earn less than $ 100
a year. Uganda was the first country declared eligible for HIPC assistance.
However, despite having a track record of over a decade of reform and strong
economic performance, Uganda still had to wait for a year for debt relief amounting
to $3 5 0 million (when discounted to today's values), or 20% of its total external
debt. Uganda has taken the lead and set an example in pledging a transparent
and accountable means of connecting debt relief to primary education spending
and other poverty alleviation measures. However, the pre-HIPC annual debt service
bill of $150 million per annum is only expected to be reduced by approximately
$15 million per annum. In addition, in no way does the HIPC process take into
account the fact that a large proportion of Uganda's debts were contracted by
the dictator Idi Amin, who was granted the loans by lenders who could not have
had any realistic expectation that there would be accountability for the use
of those funds. In any event, the benefits of HIPC seem to have been very short-lived
for Uganda. In the House of Commons on 3 February 1999, the UK development minister
Clare Short stated that, as a result of the fall in coffee prices, Uganda is
"as badly off as it was in the first place."
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Guyana became, in December 1997 the fourth country to win approval for
debt relief under the HIPC initiative and the first under. the more liberal
fiscal/openness criteria established in April 1997. In 1997, after having completed
a series of IMF-supported structural adjustment programmes, Guyana was obliged
to spend 56% of revenues on meeting external debt service requirements. The
debt relief package under HIPC, delivery of which has currently been delayed,
amounts to $253 million in net present value terms, or to debt service relief
of $25 million per year over 20 years. However, it is estimated that
the HIPC implementation will free up only an additional 2%-3% per annum for
social sector spending - and this in a country where, in 1995, only 4. 1 % of
GNP was spent on health as compared with 20.3 % on debt service. In addition,
the excessive number of micro-conditionalities in the HIPC package for Guyana
leads to a situation in which the budgetary process is transformed from one
in which economy-wide goals are identified and then backed with government expenditure
policies, to one where the fulfilment of a number of externally-identified micro-targets
is given precedence.]
It is clear from these examples that the HIPC Initiative is, in its current
form and practice, a far from adequate tool in addressing the debt crisis in
many developing countries. The essential fact for this Commission, and for the
Special Rapporteur, is that, despite HIPC, millions of people around the world
continue to be deprived of their basic human rights, to the highest attainable
standard of health, to education, and to an adequate standard of living as a
direct consequence of levels of external debt which must ipso facto be regarded
as unsustainable.
This and other international human rights bodies cannot effectively seek to hold governments to account for the progressive realization of the economic and social rights of their people so long as the means to secure those rights are tied up in debt service obligations. We therefore ask this session of the Commission on Human Rights to sharpen its message on foreign debt and human rights, and to add its authority to the call for outright cancellation of the unsustainable debts of the world's poorest countries by the year 2000. The spiritual and psychological kairos that the year 2000 represents provides an unrepeatable opportunity to muster the political will to provide a new and debt-free start for the peoples of the world's poorest countries.
