A Slow Small Step – Much Too Little, Much Too Late
Moral Assessment of Progress Toward 100% Debt Cancellation
(Religious Working Group on the World Bank and IMF)

For over two decades religious institutions and communities have joined with partners and friends in the global South to call for cancellation of foreign debts that burden impoverished communities and to put an end to destructive macroeconomic policy reforms. For too long, we have seen the bitter fruit of economic injustice destroy the present and steal the future of millions of people. For too long, they have been told to be patient, that they didn’t understand the complexities of global finance.  But the human and environmental cost of waiting is much too high.

The failure of the G7 finance ministers to reach an agreement for 100% cancellation of multilateral debt for the most impoverished countries is profoundly damaging. Hopes had been raised in June 2004, when world leaders seriously considered such a proposal for the first time. But once again, our friends in the global South have been told they will have to wait.  

We are more convinced than ever that the immediate, broad cancellation of debt - without conditions that exacerbate poverty and environmental destruction - is a moral imperative.  We consider it a necessary step toward achieving the Millennium Development Goals.  Until a decision is made and debt definitively cancelled, massive resources will continue to be diverted from health care, education and other important social services to pay interest on insurmountable debts. 

The “progress report” the G7 promised by the end of the year is a slow, small step – much too little and much too late.

Aware of the great distance yet to go and the need to address dimensions of the debt crisis not yet even on the table, we are deeply distressed by this delay. 

First we were told that the HIPC Initiative was the answer, but its promise was buried in the pursuit of debt sustainability and in the conditionalities to which it was wed.

Next we were told that the HIPC initiative was revised, that its new goal was poverty reduction, that the PRSP process would ensure local participation and accountability, that even macroeconomic policy prescriptions would be reevaluated and eliminated if they impeded progress toward poverty reduction, even more so if they themselves worsened the situation of people living in poverty. 

Thus far, we have been bitterly disappointed.

While some countries have shown clearly that the benefits of debt cancellation can improve the quality of life for impoverished people, all the steps taken thus far have been woefully inadequate.

Our assessment of the current debate about debt cancellation is that

1. further delay is unconscionable – the burden of debt is crushing the poor; we support immediate cancellation of 100% of the multilateral debt of the world’s most impoverished countries

2. creditor imposed conditions on debt cancellation or new loans are yet to be adequately judged for their impact on the poor and the earth – poverty and environmental impact assessments must be implemented across the board and their results be allowed to bear fruit in deep policy revision

3. 100% cancellation of multilateral debt for the world’s poorest countries is the next right step, but not the last.  Some important issues still on the table are

   • odious and illegitimate debt;

   • fair and transparent mechanisms for negotiating a just resolution to disputes over debt; and 

   • the need to include more low and some middle income countries in debt relief programs.

As communities of faith, we assess the justice of economic policies by their impact  on impoverished communities and the rest of creation.  When local people, burdened  by debt, see concrete improvement in the quality of their lives;  when debt no longer serves as an obstacle to environmental protection and human dignity – we will be taking real steps toward a more just global economy in which peace will begin to flourish.