A massive natural disaster reminds us why people worldwide have been engaged by the issue of debt relief. Mozambique, along with several Southern African neighbors, faces years of reconstruction in the wake of recent storms and floods that government officials say did more damage than sixteen years of civil war. Although Mozambique has been granted some debt relief in recent years, when the storms struck it was still paying $1.4 million a week in interest. Mozambique has been granted a temporary moratorium on its debt payments, but it will still have to pay its creditors back. It is due for additional debt relief in April, but this may be delayed if Congress doesn’t contribute.
The reality in highly indebted countries is grim. Half of Africa’s population–about 300 million people–live without access to basic healthcare or a safe water source. In Tanzania, where 40 percent of the population dies before age 35, the government spends nine times more on foreign debt payments than on healthcare. In 1997, before Hurricane Mitch, Nicaragua spent more than half its revenue on debt payments. Until recently, it has taken countries in structural adjustment programs six or more years to get debt relief. For lenders this seems like common sense–make sure the country has its economic house in order before canceling debts–but the human cost is tremendous. Six years is a child’s entire elementary school education. If governments are forced to cut subsidies for public education and charge fees that make schooling too expensive for the poor, it cheats a whole generation of children.
In contrast, in countries where some debt relief has already been provided there is evidence of the potential benefits. For example, Uganda established a Poverty Action Fund, into which it pledged to deposit all the savings from debt relief. One goal is achieving universal primary education. With the resources freed from debt relief, combined with other sources, primary school enrollment has more than doubled, to 5.3 million children since 1997.
Concern about the need to provide deeper and faster debt relief gave rise to an international movement–under the banner of Jubilee 2000–to cancel the debt of the poorest countries by the end of this year. Grounded in biblical mandates of jubilee calling for the forgiveness of debt, the freeing of slaves and the return of lands so as not to perpetuate generations of impoverishment, this movement seeks to promote meaningful debt cancellation for the world’s poorest nations in order to reduce poverty and prevent further environmental degradation. There are now Jubilee 2000 campaigns in more than sixty countries, creditor and debtor alike. We in the faith community here in the United States have added our voice to those of other religious leaders, including Pope John Paul II and Bishop Desmond Tutu, who have eloquently stated the principles being raised by their churches regarding the need to set economic relations right. Almost all the major religious bodies in the United States–including Catholic, Protestant, Jewish and Muslim–are working together on this initiative. This commitment crosses the spectrum: Even the Revs. Billy Graham and Pat Robertson have endorsed the need to provide debt relief to poor countries.
Providing debt cancellation also makes good common sense. For example, there is a direct relationship between the debt and rampant deforestation, as governments sell off natural resources and chop down forests to plant cash crops to earn foreign currency. The drug trade is protected in many countries because it provides valuable foreign currency for their interest payments. And the United States is losing out on future markets of hundreds of millions of people that so far remain unable to afford basic schooling, much less to buy products made in America.