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UNICEF urges debt relief for Ecuador |
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| Wednesday, 27 October 1999: Ecuador urgently needs
the help of the international community in its efforts to reduce its enormous
debt burden, including the country's recently announced initiative to embark on
a global renegotiation of its external debts, the United Nations Children's Fund
(UNICEF) said today. "While it is unusual for UNICEF to focus on the complexities of debt reduction in an individual country, the situation in Ecuador is so severe and so fraught with risk for children and women that we must speak out," UNICEF Executive Director Carol Bellamy said. "Ecuador may not possess the economic clout of an Indonesia, Russia or Brazil, but it surely deserves the same attention that the world paid to solving the financial crises in those countries." Ms. Bellamy said the severe economic and social crisis in Ecuador threatens a dramatic deterioration in the health and well-being of the population, particularly the children of poor families. One of the underlying causes of the crisis, Ms. Bellamy said, is the accumulated debt burden, which now totals US$ 16 billion, or 107 percent of Ecuador's GDP. Of this amount, US$ 13 billion is external debt. The UNICEF office in Quito has indicated that the economy of Ecuador is expected to contract by 7 percent or more this year. Unemployment has almost doubled since last year, from 9 percent to nearly 17 percent. Inflation has reached 55 percent, while real wages have fallen by almost 40 percent. The percentage of Ecuadorians struggling to survive on less than two dollars a day has risen from 38 percent to 44 percent over the past 12 months. UNICEF Quito says there are alarming signs that the crisis is diminishing access to food and basic services for poor people, particularly children. A recent survey of the recipients of the bono solidario, a modest government cash subsidy for the poor, found that nearly 70 percent of the respondents had at some point postponed medical care for their children for economic reasons. Nearly 60 percent admitted to reducing the number of meals in a day. Some 20 percent of the respondents in coastal areas said they were forced to take at least one child out of school during the first semester of 1999 due to economic problems. The government has proposed an emergency social protection programme to combat the effects of the crisis, particularly on the poorest sectors of society. However, the enormous debt burden accumulated over the past decades by successive governments is severely limiting the amount of resources which can be dedicated to social programmes, with external debt servicing amounting to almost double the allocation for such programmes. For the year 2000, the debt servicing requirements will take up more than half of the proposed government budget. By contrast, social spending has been reduced by $76 million, including a reduction of $37 million in education programmes. To ease its debt burden, the government of Ecuador announced last week that it would seek to renegotiate its external debts, including Brady bonds, Eurobonds and debts owed to the Paris Club. Ms. Bellamy called on the country's creditors, both governmental and private, to support this initiative. "While Ecuador's debt obligations were undoubtedly incurred in good faith, the servicing of the debt must not be at the cost of the health and well-being of its citizens, particularly the children," she said. In addition, Ms. Bellamy encouraged the international donor community to strengthen its assistance to Ecuador, particularly through grants to help extend the reach of priority social services in the areas of basic education, primary health care and child nutrition. UNICEF has been actively involved in efforts to expand the benefits of the Highly Indebted Poor Countries (HIPC) Initiative, which was launched in 1996 to provide debt relief to 41 of the world's poorest nations. Ecuador is not eligible for HIPC under the existing criteria. "This is an unusual opportunity to address the debt trap which plagues so many developing countries, " Ms. Bellamy said. "If Ecuador's external debts can be renegotiated in such a way as to lessen the crushing burden of debt repayment, and hence allow the government to dedicate greater resources to social programmes, this would set an important precedent for other Latin American countries." Finally, Ms. Bellamy also called on the government to give priority to basic social services in its budget allocations for the year 2000. Expanding coverage of basic services, she said, will not only help to protect vulnerable groups from the worst effects of the crisis, but would also contribute to sustainable and equitable economic growth. UNICEF is supporting the government's emergency social protection programme, particularly in maternal and child health, early childhood care and nutrition and basic education, including cash subsidies to prevent poor families from pulling their children out of school. UNICEF is also helping develop mechanisms to monitor the social impact of the crisis, including the levels and effectiveness of government social spending. |
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| Please email media@unicef.org with comments or requests for more information, quoting CF/DOC/PR/1999/47 |
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