| Cancel the debts owed by Honduras and Nicaragua |  |
| Cancel the debts owed by Honduras and Nicaragua | |
Jubilee 2000 Campaigns in Honduras and Nicaragua have called on western governments to lead the humanitarian response to the hurricane disaster in central America by cancelling the debts owed by Honduras and Nicaragua, amounting to $10.4 billion.
Clare Short, UK Secretary for International Development, in an interview on BBC radio on the 5th November dismissed these calls for debt relief as an “irrelevance” in the aftermatch of Hurricane Mitch.
Yet as the international Red Cross seeks to raise $7.4 million in emergency to meet the devastating impact of Hurricane Mitch, the countries' are paying $2.2million every day in debt service to rich creditors.
The natural disaster has highlighted the `unnatural' disaster imposed by creditor countries: every year Honduras pays about 80% of total government revenue in external debt repayments. Nicaragua is little better with a figure of 51%.
Director of Jubilee 2000 Coalition in the UK, Ann Pettifor, said:
“The huge debt burden is a strain on Nicaragua and Honduras at the best of times. Now, when they have been hit by disaster, it is a noose around their necks, slowly being pulled tighter. Rich creditors should lead the way by cancelling the debts owed by these countries instead of demanding their repayments, year after year.”
The Nicaraguan Jubilee 2000 campaign has called for an immediate 90-day moratorium on debt payments as a first step to the cancellation of Nicaragua's debts. The moratorium is in line with a recommendation from the recent Commonwealth Finance Ministers meeting in Ottowa in September.
The Honduras Jubilee 2000 campaign was due to hold a Latin American-wide Jubilee 2000 conference this week. They have had to cancel following the devastating floods. However in an appeal today they called for the immediate cancellation of Honduras and Nicaragua's debts. Francisco Marchado of the Honduras Jubilee 2000 campaign said: “We need debt cancellation now more than ever if we are to rebuild our devastated country.”
Entire villages in the north of Honduras are under water, and as many as a third of the houses in the Honduran capital, Tegucigalpa, where 1 million people live, have been badly damaged or swept away by the raging waters of the Choluteca River. The mayor, Cesar Castellanos, who has since been killed in a helicopter crash, said that “blocks and blocks of poor and middle-class neighbourhoods, shops, they have all been completely razed.” In Nicaragua over a thousand people were killed following a mud and rock landslide caused by the overflowing of a lake in a volcano crater.
Against this tragedy, is the huge burden of external debt. Honduras's total external debt has tripled since 1980 and stood at $ 4.5 billion in 1996. Nicaragua's total external debt is $5.9 billion, and until recently Nicaragua had the highest debt per capita of all countries in the developing world. Both countries are in the Heavily Indebted Poor Countries Initiative, but debt relief under the initiative is not due for many years. Nicaragua will have to wait until 1999 before a decision is made on how much debt relief it will receive. It will then have up to three years to wait before receiving anything. Honduras, however, will not reach a decision point within HIPC until 2001, and the IMF holds the view that Honduras does not need full HIPC debt relief.
This natural disaster throws a new and tragic perspective on the scandal of the international debt crisis, and the shame of creditor countries and banks who continue to demand payment. Government resources in Nicaragua and Honduras urgently need to go to the massive recovery programme. There is no room for the servicing of external debt in the current emergency, and Jubilee 2000 calls upon the creditor countries and institutions to recognise this reality and to cancel all due debt repayments from these two countries immediately.
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