Debt relief success questioned
2005-06-17 18:40
Nairobi - The world's public figures, from U2 front-man Bono through to Harvard economist Jeffrey Sachs to the Dalai Lama, agree on one thing. Cancelling the debts of the world's poorest countries is a good thing.
In 1998 Uganda became the first country to benefit from large scale debt relief. At the time the country owed $3.6bn, and almost a fifth of its annual budget was going on servicing that debt.
Debt relief is designed to enable poor countries to make a fresh, start, unburdened by massive loan repayments. In the case of Uganda, the government was willing to implement reforms and the economy grew.
The money saved was put into an anti-poverty fund, which funded among other things clinics and classrooms. As a result, thousands of children were able to go to school for the first time.
Not much long-term progress
Many saw in this a rare example of success in promoting development through debt relief, although critics maintain little has been achieved in the long term.
Seven years on, Uganda is more deeply in debt than ever, owing some $4.8bn.
Just 13% of the money supposed to have been invested in schools has been allocated, according to a study by the World Bank.
Transparency International, an organisation that monitors corruption, places Uganda at 102 on its list of 145 countries.
Two years ago, Uganda's government, headed by President Yoweri Museveni, significantly boosted its military expenditure to combat the Lord's Resistance Army (LRA) rebel group which has been active in the north of the country along the border with Sudan for the past two decades.
Nevertheless, Uganda has struck it lucky again. Last weekend, the finance ministers of the G8 industrialised nations decided the East African country would be among 18 nations to benefit from complete and immediate debt relief.
Boost for economic development
"An enormous relief," was how finance minister Ezra Suruma described the move. Cancellation of debt would certainly aid the country's economic development, he said.
When asked what the money saved in debt servicing costs should be invested in, Suruma pointed to infrastructural projects, including a controversial dam on the Nile.
But he emphatically rejected increasing teachers' pay.
Zie Gariyo, chairperson of a Ugandan national organisation devoted to cancelling the debt, stressed corruption must be tackled if the additional money was to benefit the country's poor.
"As the money slowly filters through the country's complex local government structure, some of it disappears into pockets of officials who have connived with contractors," Gariyo said, adding it was vital that Uganda did not sink into debt again. - Sapa-dpa
- SAPA