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UNICEF calls for ease of debt burden for hurricane-stricken Central America

UNICEF said a proposal announced Monday by the World Bank, International Monetary Fund and Inter-American Development Bank to fast-track consideration of debt relief for Honduras and Nicaragua, the two countries worst hit by the hurricane, was a step in the right direction. But it added lender nations should follow the lead of France which this week cancelled all public debt owed to it by the two countries.

"These countries have been ravaged by one of the worst natural disasters ever to hit the Western Hemisphere and they're going to need every dollar they have to get back on their feet," said UNICEF Executive Director Carol Bellamy.

Ms. Bellamy said just rebuilding the basic infrastructure of the affected countries would require hundreds of millions, perhaps billions, of dollars to restore to millions of people access to safe water and sanitation, basic education, primary health care and adequate nutrition. She said significant debt relief was an essential part of the international rescue effort.

"An immediate and sustainable solution to the debt crisis is the only way Central American countries can get on with the crucial work of rebuilding its schools and homes, reconstructing roads and bridges and restoring water supply," she noted.

Nicaragua's foreign debt is 5.8 billion dollars and it is scheduled to pay 200 million dollars a year in interest, according to the World Bank. Honduras, which owes 4.4 billion dollars, is expected to pay 500 million dollars a year in interest.

Both countries are part of the World Bank's Highly Indebted Poor Country (HIPC) initiative, which provides debt write-off in exchange for economic reform. There have been increasing calls for a speeding-up of the HIPC process and for the inclusion of the fiscal burden of debt servicing as a criterion for eligibility.

The enactment of yesterday's proposal by the World Bank, the International Monetary Fund and the Inter-American Development Bank would mean that Nicaragua and Honduras could receive additional debt relief which would help millions of people regain access oto basic social services as soon as possible. They would also have access to a trust fund to help cover debt service obligations.

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