Canada breaks the debt dam Jubilee 2000 Coalition

Canada's Prime Minister, Jean Chrétien, yesterday (March 25th) said Canada would act alone if G7 countries failed to respond adequately to the needs of the severely indebted countries. Announcing a series of measures to reduce debt, Mr Chrétien broke ranks with other G8 leaders, who have insisted only on acting together. An official briefing from the Canadian finance ministry backing up his announcement confirms: “Should there not be a multilateral ... agreement to write down 100 per cent of bilateral debts for LLDCs [the least developed countries], Canada would proceed unilaterally with bilateral debt agreements.”

Jubilee 2000 Coalition Director, Ann Pettifor, has welcomed the announcement: “The cracks that have been emerging within the G8 over recent months have opened up into a chasm. The dam has broken. Canada has shown the others the way. There is still further to go – but if every other creditor signed up to Canada's proposal, we would take another step towards a debt-free start for the poorest countries in the new millennium.”

Mr Chrétien said that Canada had “forgiven” over $1.3 billion in foreign debt owed by developing countries and had consistently called for more generous terms. He said this gave Canada an authority and credibility to adopt a leading role in the negotiations at the forthcoming G8 summit in June. He set out four proposals that Canada would adopt unilaterally in dealing with the remaining debts owed to it by developing countries, and which it would seek to persuade other G7 countries to agree and adopt.

Amongst his four proposals, the most significant was his proposal that industrialised countries forgive 100 per cent of the debt owed to them by those least developed of the Heavily Indebted Poor Countries (HIPCs). Although he did not give full details, this suggests that he intends full cancellation of all bilateral debts of the least developed of the HIPCs. The Canadian government confirmed it was calling for write-down of 100 per cent of all bilateral debts, not just the pre-cut-off-date debt. The Paris Club normally deals with only pre-cut-off-date debt, which is often considerably less than the total bilateral debt.

He also pushed for further action by multilateral institutions by joining calls for IMF to sell gold to fund extra relief. He proposed that the IMF sell 10 million ounces of gold which would raise at the current price $2.8 billion – substantially more than the British and US proposals for sale of $1 billion of gold.

Mr Chrétien also stated that those countries that showed clear intentions of increasing spending on health and education would benefit from increased debt relief and future assistance. Those that oppressed their own people and destabilised their neighbours would not receive debt relief. The Canadian Jubilee 2000 campaign welcomed the importance given to health and education, but stated that it was ironic for the Canadian Government to simultaneously back structural adjustment which undermines health and education. The Canadian campaign called for conditionality to be set based on a fair and independent process that involved civil society in the South.

 


Home | Who we are | News | What you can do | Features | Policy | Resources | Links | Petition | Questions