Latin American Report

Foreign Debt Tribunal - Verdict ()

Clinton's Offer to Cancel Debt

From PACS (Policy Alternatives for the Southern Cone):

Clinton Proposes Debt Cancellation for Poorest Countries

U.S. newspapers announced that Clinton will offer to approximately 50 (instead of the 41 currently considered) of the world's poorest countries a cancellation of external debts equal to US$3 billion . The principal argument is that these countries commit most of their budgets to debt payments and have little left over for social spending and other expenses related to the country's internal economy.

The news seems good, and reinforces the international campaign of Jubilee 2000, creating a precedent in the area of official credit. However, there are problematic aspects of the proposal:

1. Cancellation will only be "conceded" under the condition: that the benefitting country accept submission to profound adjustment. We know the kind of adjustment the U.S. is talking about: neoliberal adjustment, promoted under the baton of the IMF, seeking massive privitization and weakening of the State, mercantilization of all public services, total opening to foreign capital, rigid monetary reform, abandonment of any attempt to formulate a national project of development.

2. Most of the cancellations' value was already eliminated as unpayable from national accounts (the same occurs with a debt from private commercial banks, which write off from their financial assets a large part of the debt of countries considered insolvent ). Thus, it is estimated that the impact of the "massive" cancellation of US$3 billion upon the U.S. budget will be only US$200 million!!! The total debt of the most impoverished countries owed to official creditors equals almost $US 75 billion.

This information gives material to the Jubilee 2000 national campaigns for a more firm mobilization. To require cancellation as a right of these countries, to reject the conditionalities of neoliberalism, to affirm those countries that in fact involve their society in the utilization of resources saved for human development projects. And to extend the logic of cancellation also to private banks who don't want to assume their responsibility for the debt crisis in those countries. And to the multilateral financial institutions who are the principal creditors in a number of the 50 most impoverished and indebted countries.

If the logic that the national budget of debtor countries needs to be sufficient to attend to the social and economic necessities of a country, then countries like Brazil, Argentina, Mexico and Venezuela, also need cancellation! Currently, it is estimated that close to 63% of Brazil's 1999 federal budget is committed to service and restructuring of its internal and external debts!

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FOR MORATORIUM NOW AND IMMEDIATE RENEGOTIATION WITH INTERNAL AND EXTERNAL CREDITORS! FOR A SPLIT FROM THE IMF! FOR A COMPLETE AUDIT OF THE BRAZILIAN EXTERNAL DEBT AND A VERDICT ON THE UNPAYABLE OR ALREADY PAID PART OF THE DEBT THAT REMAINS! EVERYONE TO THE TRIBUNAL ON EXTERNAL DEBT!

RIO DE JANEIRO, TEATRO JOAO CAETANO, APRIL 26-28, 1999