|
 |
 |
 |
|
Media releases > Get serious on debt
VSO and Oxfam call on the international community to get serious on debt
(Friday 1 October 2004)
Millennium Development Goals on education are fantasy without further international action on debt.
On the eve of the IMF and World Bank meetings in Washington, international development agencies VSO and Oxfam have today published a report on behalf of the Global Campaign for Education (GCE). It criticises international financial institutions (IFIs) including the IMF for failing to put people at the centre of their lending programmes.
The report calls upon the IMF and wealthy countries at this Friday’s G7 finance ministers meeting to announce 100% cancellation of multilateral debt owed by the world’s poorest countries, funded in part by a revaluation of IMF gold stocks. Gordon Brown highlighted the possibility of this at the Labour Party Conference last weekend.
The report shows how conditions being placed on indebted countries are done so in the interests of macro-economics and are making the Millennium Development Goals (MDGs) unattainable for some countries. Meanwhile the IMF is sitting on billions of dollars worth of gold they neither need nor use.
The report cites the example of Zambia where 9,000 trained teachers are ready to enter the classroom. But because they can’t be paid, their skills are going to waste. A budget cap on government spending imposed by the IMF means that the government is not able to employ any more teachers.
Even after Gordon Brown’s welcome move on Sunday to cancel the UK’s proportion of third world debt, Zambia will still be paying a staggering $156 million more on debt repayments than it can spend on education this year. This money could be better spent on ensuring Zambian children receive an education.
While the Dutch Directorate-General for Development Cooperation (DGIS) have stepped in with a short-term emergency package to allow some of these 9,000 to be taken on, this does not solve the long-term problem of how to finance future increases in teacher recruitment, needed to achieve the MDGs.
Without a more flexible, people-centred approach from the IMF it will be impossible for countries like Zambia to make quality education available for all children. There is also the possibility of trained teachers migrating to countries offering better pay and conditions. This in the context of HIV and AIDS, which is already decimating the Zambian work force will be disastrous for the education system in Zambia and make a mockery of the 2015 targets. Silas Silewu, Head Master at Maano Basic School in Lusaka says:
We have only three teachers, including me, to teach 526 pupils. The average class size is 70 pupils and each teacher has to teach two classes. To work effectively we need at least 12 teachers.
The IMF has encouraged a wage freeze for public sector workers in Zambia in order for the country to reach the HIPC (debt initiative for Highly Indebted Poor Countries) completion point. Zambia is desperate to keep the IMF onside and reach the HIPC targets, as qualification for debt relief is often seen as an answer to the desperate shortage of cash available for poverty reduction.
In reality achieving HIPC targets merely means that Zambia will be able to begin repaying some of its debts to the IMF. It will have little impact on the Zambian government’s ability to employ more teachers. In fact the Zambian finance ministry has said:
If anything the adjustment is likely to get tougher. What we are doing right now is probably the easy part.
Zambia shows us the need for a radical change in the way the IMF does its business. IMF commitments to the Millennium Goals are tested in exactly these challenging circumstances and the fund is failing on all counts. In terms of gold, the total owed by Zambia to the IMF, World Bank and African Development bank is $1.5 billion dollars. To write this off completely and give Zambia a fresh start would involve revaluing just 3.8% of the IMF gold reserves.
Editors' notes- The IMF and G7 should today announce 100% cancellation of multilateral debt owed by the world’s poorest countries, funded in part by a revaluation of IMF gold stocks.
- Rich countries should pledge $50bn extra in development aid annually to meet the Millennium Development Goals (MDGs), including the additional US$5.6bn needed to achieve universal basic education. Developed countries should set clear timetables to reach the agreed target of 0.7% of GNP spending on overseas development assistance by 2010.
- A fully independent review of the impact of economic policy conditionality should be conducted, including inflation targets and payroll ceilings, as countries move into the second round of Poverty Reduction Strategy Papers. The report demands due diligence of the IMF in ensuring all macroeconomic frameworks are the product of national discussion of different scenarios, based on independent Poverty and Social Impact Analysis (PSIA) linked to MDG needs.
- The IMF must be explicit in its communiqués that adequate numbers of trained teachers and health workers are vital to achieving the MDGs and resources must be found to pay them a living wage.
- Funding for basic education and other poverty reduction strategies must be delinked from the IMF’s lending programme.
- The report encourages rich countries to expand their commitment to direct budget support, pooled sector funding and predictable long-term financing through mechanisms such as the EFA Fast Track Initiative and the proposed International Financing Facility.
- The report calls upon developing country governments to make poverty reduction and the attainment of the MDGs an explicit objective of macroeconomic policy with transparent and measurable indicators in the annual budget, and maximize expenditure on poverty reduction, including education and health.
- VSO is encouraging supporters to fill out an action card calling on the IMF to cancel Zambia's debts.
- For more information, and to talk to a spokesperson contact VSO Press Office
|
|
 |
|
 |
|
|
Take action - call on the IMF to cancel the debts of developing countries |
|
|
