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US BLOCKS DEBT RELIEF FOR POOREST COUNTRY IN THE WORLD
DEAL BROKERED FOR IRAQ WHILE ETHIOPA LEFT TO DROWN UNDER UNSUSTAINABLE DEBT
In a new briefing issued today, nef (the new economics foundation) reveals that the most powerful and wealthy creditor nations in the world, particularly the US and Germany, are deliberately blocking and delaying agreed debt relief for Ethiopia. The briefing exposes the double standards of major Western creditors towards debtor nations.
World Bank and IMF officials have calculated that Ethiopia needs an additional $700 million of debt relief to become sustainable. This recommendation is being blocked by the US and German World Bank/IMF shareholders. At the same time the US is applying intense international pressure to ensure that Iraq, whose future export revenues are projected to be 35 times those of Ethiopia, benefits from debt relief.
Under the Heavily Indebted Poor Country (HIPC) Initiative, the US and Germany are party to formal agreements to cancel the debts of the poorest, most indebted nations. In the event of external shocks these creditors have agreed to 'top up' debt relief so that debtor nations can be restored to sustainable levels of indebtedness.
Ann Pettifor, director of Jubilee Research at nef said today: "In Cologne in June 1999, Germany's own Chancellor led the creation of the 'Enhanced' HIPC Initiative. At that Summit, the US and other G8 leaders promised their electorates - led by Jubilee 2000 supporters - that countries like Ethiopia would benefit from debt relief.
"Today Western creditors are playing fast and loose with that commitment, and with their own international rules and obligations. By bending over backwards to cancel Iraq's debt, and at the same time wilfully flouting their own commitments to Ethiopia, creditors are breaking promises to their electorates, as well as undermining progress in heavily indebted countries.
"We call on the US and Germany to honour commitments made to Ethiopia - and immediately grant her the relief calculated as essential by officials in the World Bank and IMF."
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