USCCB - (Office of Media Relations) - Debt Relief Plans Should Include Poverty Alleviation Component

Debt Relief Plans Should Include Poverty Alleviation Component

WASHINGTON (April 23, 1999) -- Poverty alleviation should be a goal of efforts to relieve the debt burdens of the world's poorest countries, says the Administrative Board of the United States Catholic Conference in a major statement on the issue released today.

"The debt crisis should be measured in terms of its human costs and moral consequences," the Bishops said in A Jubilee Call for Debt Forgiveness. The statement was released today to coincide with next week's meetings of the World Bank and International Monetary Fund.

The total external debt of developing nations exceeds $2 trillion; the 41 most impoverished and indebted countries owe more than $200 billion to creditors. Many indebted nations spend more on debt repayments than basic human services. Uganda, for example, spends $3 per person annually on health and education and $17 per person annually on debt repayment. At the same time, 20 percent of Ugandan children die from preventable diseases before reaching age five.

"We hope the Jubilee Year 2000 marks a new beginning in the way policy makers view debt relief, bringing new attention to the role debt relief can play in promoting human development in the poorest countries," the Bishops said.

The Bishops' hope is spurred by the willingness of the international financial institutions (IFIs) to consider proposals that include poverty alleviation and human development in the calculus they use for determining debt relief.

In their statement, the Bishops cite three catalysts for their ongoing efforts to secure debt relief. One is the opportunity for "new beginnings and to right old wrongs" presented by the Jubilee Year 2000. Another is that the debt burden of the poorest countries "is crushing the lives and dignity of vulnerable children, women, and men." The final impetus is the need to address the debt crisis as a symptom of a "larger unfinished agenda of this century: the problem of underdevelopment in so many parts of our world."

"Overcoming poverty and inequitable development will take more than debt relief," the Bishops acknowledge. "... Nevertheless, debt relief is often a prerequisite for long-term, sustainable development of the poorest countries."

Using Catholic social teaching as a basis, the statement articulates seven criteria to help evaluate and guide decisions about debt relief. Specifically, the Bishops propose debt programs that:

include the full range of poor countries that now have to make unacceptable sacrifices in human development to repay their debt. "To date, creditors have determined which countries should be eligible for debt relief based on how much relief is needed to bring the country's debt to an acceptable, 'sustainable' level .... Proposals that base debt relief on human development criteria deserve careful consideration.
ensure that resources freed up through debt relief are used for poverty reduction. In Uganda, for example, "the government indicated a willingness to establish a fund that would use the resources freed through debt relief for primary health care, primary education, and roads."
foster the active participation of civil society in decision-making processes. "There is widespread agreement that the participation of churches, associations, philanthropic organizations, and other nongovernmental organizations is essential to formulating national development plans that reflect the needs and priorities of the poor."
ensure that economic reform policies associated with debt relief make adequate provision for those adversely affected and have poverty reduction as a central goal.
include mechanisms of accountability, so as to overcome corruption and other obstacles that prevent debt relief from benefiting the poor.
are fully funded, with costs shared equitably among creditor governments and international financial institutions.
are part of a much broader, coordinated effort to promote sustainable development for the poorest countries.

"Our analysis of the debt problem begins with the presumption that when countries, like individuals, contract a loan, they have an obligation to repay it," the Bishops said. "But this presumption may be overridden in certain circumstances. One such circumstance is when a country cannot repay its debt without critical reductions in spending for health, education, food, housing, and other basic needs, and when debt has become a serious obstacle to development."

The immensity of Third World indebtedness, and its human toll, have drawn repeated calls from Pope John Paul II and other religious leaders for significant debt relief, if not outright forgiveness. The statement released today is the most recent of a series of Bishops' initiatives on debt.

Last October, in conjunction with the Holy See and Seton Hall University, the USCC sponsored a major conference on the ethical dimensions of international debt, drawing together policy makers, academics, church leaders, activists from debtor and creditor nations, and officials from IFIs.
In March, Catholic Campaign on Debt educational kits were sent to every diocese in the country.
Earlier this month, the USCC endorsed new legislation, "The Debt Relief for Poverty Reduction Act" (HR 1095), which would provide significantly more debt relief for more countries in a shorter time than provided under current policies.

"For believers, debt cannot be mere numbers on a page or credit card bills," the Bishops said. "Debt is not simply about those things. It is about how children live and die half a world away. It is about poverty and people. ... Debt must be a call to action, an opportunity to stand up for the least of these, a chance to make a difference. As we approach the Great Jubilee, our faith and our Church call us to stand with the poor in their just call and urgent hope for debt relief."