'Great day for poorest people'

30th September 2005 at 01:00
Campaigners welcome debt cancellation which should free African nations to spend on schools.Yojana Sharma reports

The World Bank and International Monetary Fund have backed the G7 agreement to cancel pound;31 billion in debts, clearing the way for African countries to spend more on education.

However, campaign groups warned that any real effect of the agreement on helping to eliminate poverty will depend on the conditions attached.

The agreement at the annual IMFWorld Bank meeting in Washington at the weekend, attended by Gordon Brown, the Chancellor, allows for 100 per cent debt cancellation, initially for 18 mainly African countries. This could eventually free up nearly pound;1bn annually to spend on education and health.

U2 singer Bono, co-founder of Data (Debt Aids Trade Africa), said: "This is a great day for the poorest people on the planet, who up to now, have been misspending what little resources they have on paying back ancient loans to rich countries instead of educating and caring for their own."

But ActionAid said: "The deal still needs to be expanded to include more countries and to eliminate harmful strings attached."

The charity said in a new report that there was often a contradiction between such agreements and IMF policies. "On the one hand they (developing countries) are expected to achieve internationally agreed goals on education, gender and health, but on the other, the IMF tells them that they cannot increase their spending to a level necessary to achieve these goals."

In a wide-ranging study of education funding in developing countries, ActionAid found that IMF limits on public-sector wages prevented countries from employing enough teachers. "The tight macroeconomic policies imposed by the IMF in return for loans prevent countries from increasing public spending, making it difficult or impossible to provide education for all citizens."

ActionAid's Patrick Watts said: "We still don't know what hoops poor countries will have to jump through. In the past, IMF conditions have delayed debt relief."

IMF spokesman William Murray said: "Our programmes are designed to enable countries to provide education and health. However, countries come to us when they are in dire straits and in the short term tough choices must be made which can lead to reductions in spending."

ActionAid International: Contradicting Commitments - How the Achievement of Education for All is being Undermined by the International Monetary Fund www.actionaid.orgwpscontentdocumentscontradicting.pdf

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