USCCB - (SDWP) - Debt Relief

Debt Relief

February 2003

Issue: Heavy debt burdens in the poorest countries continue to draw precious government resources away from critical needs. Many poor countries in Africa are currently confronted with drought and a severe food crisis, which is compounded by a high incidence of HIV/AIDS and other infectious diseases. Heavy debt burdens impede the ability of governments to respond to these crises and other development needs of their people.

Background:
Many poor countries have begun to see their debts reduced through the Heavily Indebted Poor Country (HIPC) initiative, which was adopted in 1996 and expanded in 1999 in response to successful advocacy by the global Jubilee 2000 movement, in which the Catholic Church throughout played a major role.

However, as implementation of the HIPC program proceeds, a substantial disparity in the amount of debt relief being received by HIPC countries has become evident. This is because the amount of debt relief under HIPC is determined by a country's export earnings rather than its budgetary resources. Thus, while countries such as Rwanda and Ethiopia are receiving relief sufficient to free up substantial resources, most HIPC countries, such as Zambia and Malawi, are receiving much less.

USCCB Proposal for Deeper Debt Relief:
In order to address disparities and to assure deep debt relief to all HIPC countries, the USCCB developed a proposal calling for all HIPC-eligible countries to receive debt relief sufficient to reduce their annual debt payments during 2003-2005 to no more than 10% of government revenues, or in the case of countries suffering a public health crisis, to no more than 5% of government revenues.

Under this proposal, 19 of the 26 countries which have so far qualified for HIPC debt relief would receive new debt reduction, and 16 of these 19 would be eligible for the 5% ceiling. The U.S. budgetary cost of the HIPC amendment for fiscal year 2003 is estimated to be between $50 and $100 million.

Legislative Action 2002:
In July 2002 this debt relief provision was approved by the Senate (H.R. 2069) as part of a global health bill addressing HIV/AIDS and other health crises in poor countries. A bipartisan debt relief bill incorporating the USCCB proposal had been introduced in the House (H.R. 4524) in April 2002, but intensive advocacy to include the major elements of this bill in the House version of the global health bill were not successful, and the session ended without new debt relief legislation. Given the success in the Senate and the evidence of substantial bipartisan support in the House, efforts to provide deeper debt relief for poor countries are being resumed in the current session of Congress.

Ask legislators:

To immediately introduce and support bills and/or amendments that would limit debt payments of HIPC countries to no more than 10% of government revenues, and, for countries suffering public health crises, to no more than 5% of government revenues.

USCCB Position: The U.S. Catholic bishops urge Congress to introduce legislation to assure deep debt relief for all HIPC countries, especially those suffering public health crises.

the USCCB calls for debt relief sufficient to reduce annual debt payments to no more than 10% of government revenues, and, for countries suffering public health crises, to no more than 5% of government revenues.

Resources:

See the April 2002 letter sent to Senator Santorum on the Debt Relief and Enhancement Act 2002 at: www.usccb.org/sdwp/international/debtleg02.shtml.

For More Information:

Gerry Flood, 202-541-3167 (ph); gflood@usccb.org, or Kelly Hicks, 202-541-3153 (ph); khicks@usccb.org