WASHINGTON (March 31, 2006) – The Chairman of the Committee on International Policy of the United States Conference of Catholic Bishops welcomed the decision this week by the World Bank Executive Board to approve debt cancellation for an initial 17 countries effective July 1. It also welcomes the agreement to cancel poor countries’ debt in the least time possible.
Bishop Thomas Wenski, Chairman of the Committee on International Policy said: “I welcome the recent decision of the World Bank Executive Board. This important step will mean that poor countries will not have wait over a year for debt cancellation once they have qualified. This step will relieve the burdens on some of our most vulnerable brothers and sisters around the world. This action is concrete application of Pope John Paul II’s call for the ‘globalization of solidarity.’ The poverty that traps so great a portion of our human family shocks us and continues to scandalize. As John Paul II often repeated: ‘Solidarity means we are our brother’s keeper.’ As a global community, we have to show solidarity not only affectively but effectively. Debt cancellation moves in the right direction and shows effective solidarity.”
Background: This latest decision by the World Bank flows from the commitment made by the G8 (Group of Eight) leaders last year in Edinburgh, Scotland. The debt agreement finalized this week will cancel 100% of 17 impoverished countries’ debts to the International Monetary Fund (IMF), World Bank, and African Development Bank in 2006. When other countries become eligible for debt cancellation, they will not face lengthy delays before they have to cease paying back these onerous debts. This is a small but significant victory that flows from the sustained interest and advocacy of the Catholic Church and other partners.
Explanation: The plan for implementation of debt cancellation originally under consideration at the World Bank Board would have required impoverished countries to keep making non-refundable debt payments to the World Bank, even after reaching the completion point i.e. when they become eligible for debt cancellation. USCCB and other debt groups offered an alternative that would honor the initial spirit of debt cancellation commitment by granting such cancellation within two to three months of reaching the completion point, instead of having to wait for over a year.
Under the plan approved yesterday, additional impoverished countries that complete mandatory economic reforms and reach “completion point” in the International Monetary Fund (IMF) and World Bank’s debt relief program will see their debts cancelled within three months of qualifying. This will enable a country like Malawi which is estimated to reach completion point in June 2006, to see debt cancellation to the World Bank on July 1, 2006, rather having to wait until July 2007 for desperately needed relief.
USCCB continues to call for the cancellation of debts from dozens of other impoverished nations that require debt cancellation to meet Millennium Development Goals and debt to other significant creditors such as the Inter-American Development Bank. USCCB will continue to work with others to build on the current agreement of fighting poverty in 2006 and beyond through bold debt cancellation initiatives.