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UNICEF, Oxfam call for new funds and faster debt relief

Thursday, 29 July 1999: Wealthy nations must honour the Cologne Initiative and speed debt relief to countries that make a commitment to reduce poverty, UNICEF and Oxfam said today in a joint paper.

The two agencies submitted the paper to a conference of finance ministers opening today at the Economic Commission for Africa in Addis Ababa.

The Cologne Initiative authored by the G7 in June expanded the Heavily Indebted Poor Country Initiative (HIPC) by approximately $28 billion dollars, to be applied at the rate of $2 to $3 billion a year. At the time, the G7 said its central objective was to provide greater focus on poverty reduction by releasing resources for investment in health, education and social needs.

UNICEF and Oxfam assert that the most critical imperative now is to identify the actual new resources that will be used for debt relief and to hasten the release of HIPC countries from the debt crisis.

Oxfam President Raymond C. Offenheiser stressed that debt reduction should not come at the expense of the aid budgets of donor nations.

"Without a commitment to find new money, the wealthy countries will inevitably raid their aid budgets, in effect robbing Peter to pay Paul. The goal agreed to in Cologne only amounts to a third of what rich countries have already cut from their aid budgets. We need expanded resources to accelerate debt relief and make sure its benefits actually reach the poor. The UNICEF-Oxfam proposal brings debt relief into line with international social commitments, such as the reduction of child and maternal mortality and education for all."

"These budgets have been in a steady decline since 1992," he said. "It would be a tragic irony if debt relief became an inadequate substitute for declining aid revenues. The agencies proposed debt-for-development plans under which countries would qualify for debt relief as soon as they demonstrated a capacity to absorb the savings into national poverty reduction strategies. The agencies argued that such a process would conform with the economic concerns of the G7."

"Universal access to basic social services like education and health are a great stimulus to economic growth," UNICEF Executive Director Carol Bellamy said. "No country has ever reached its development goals when the majority of its people are suffering the deep poverty facing hundreds of millions in the world today. The G7 meeting in Cologne should be remembered as a crossroads where the wealthy of the world recognised that economic reform and human development are not contradictory, but are, in fact, interdependent."

Now debtor countries must to go through a complex six-year process simply to qualify for HIPC aid. The UNICEF-Oxfam paper says countries should qualify on the basis of a two-year record of progress toward economic reform and poverty reduction. The paper encourages HIPCs to give special weight to budget management, planning and the creation of programmes that serve the poor, especially children and women.

The paper builds on efforts by the World Bank and other donors to focus economic reform in such a way that it works to reduce, rather than increase, poverty.

The UNICEF-Oxfam paper outlines the current reality in the HIPC countries:

• 47 million children out of school;
• One in five children dead before the age of five;
• Life expectancy 26 years shorter than in the industrialised countries

"Breaking the hold of destitution is far less expensive than bearing the moral and financial costs of permitting such acute poverty to continue," Ms. Bellamy observed.

"In the face of the massive human development deficit in HIPC countries, it is morally wrong and economically irrational for them to be spending more on debt servicing than they are on education and health," Mr. Offenheiser added.

The UNICEF-Oxfam paper continues a period of strenuous advocacy during which many have suggested that 2000 be seen as a year of jubilee in which outstanding debts are forgiven, enabling a new beginning. One result of advocacy and growing consensus on the merits of debt relief is that it is now an agenda item on the table of the world's industrial states.

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