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Issue: Heavy debt burdens continue to draw precious government resources away from critical needs, such as health care, education, water and other social programs in the poorest countries. Debt burdens also impede the ability of governments to respond to crises such as HIV/AIDS, and complex emergencies such as droughts, food shortages, and civil strife.
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 countrys 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.
In order to address disparities and to help assure deeper debt relief to all HIPC countries, the USCCB developed a proposal, that has since been passed into law, urging the United States to work with other creditors to limit the annual debt payments of HIPC countries to no more than approximately 10% of government revenues, or in the case of countries suffering a public health crisis, to no more than approximately 5% of government revenues.
Under this proposal, about 22 of the 26 countries which have so far qualified for HIPC debt relief would receive new debt reduction, and about 15 of these 22 would be eligible for the 5% ceiling.
New Debt Bill Passes:
In July 2002 this debt relief provision was approved by the Senate, but not the House. In early 2003, as the Senate and House again took up legislation to address global health crises, the USCCB continued to urge Congress to include deeper debt relief in the legislation. In the final hours of debate on the Global AIDS Act, the debt relief provision was accepted as an amendment and was subsequently passed into law (P.L. 108-25). In the upcoming months, the USCCB will continue advocacy to urge the Bush Administration to actively pursue the negotiations with other major creditors necessary to implement the debt relief law.
USCCB Position: The USCCB worked for and commends Congress for approving deeper debt relief for poor countries and urges members of the relevant Congressional Committees to urge the Bush Administration to work with other major creditors to implement the new debt relief law.
Resources:
See the May 2003 letter from Bishop Ricard to the Senate on the global AIDS bill, and the April 2002 letter sent to Senator Santorum on the Debt Relief and Enhancement Act 2002 at: www.usccb.org/sdwp/international/
For More Information: Gerry Flood, 202-541-3167; gflood@usccb.org