Debt Relief
Many small government advocates like myself were against the G8 decision to approve debt reliefe to 18 poor countries. They believe that countries should be held responsible for their loans, and anyway, why should USAID be using our tax dollars for its charity work.
The problem with this point of view is that these loans should never have been given. Most of them were given through a joint project between the World Bank and International Monetary Fund. Both organizations are backed by the G8 nations, the President of the United States is even responsible for appointing the World Bank president. They loaned money to the corrupt regimes of various brutal dictators. The dictators then spent this money on their lavish lifestyle, and in many of the cases were ousted from power. When they were ousted, they took the remaining money and ran. The people of the state never saw the benefits of that money. In fact, it was often used as an oppressive tool to prolong the reign of the cruel regimes.
While the people of the country never saw the money, the World Bank and IMF held the people responsible for paying back the debt. Thus, any future government had to spend the majority of their income paying back the debt. In some countries it was 80% of their tax income. When the governments were unable to make payments, the WB/IMF would give them another loan to make the payments through the HIPC (Heavily Indebted Poor Countries) program. These loans came with many strings attatched, pushing the government to undertake projects which were proven unsuccessful, putting the country into deeper financial arrears. The World Bank even admitted that the HIPC program was a failure, yet they continued to act as loan sharks demanding payments on their loans.
These loans should never have been given, and the World Bank and IMF should have been forced to relieve the loans themselves, using their rather large untaxed coffers. But, because this would have taken money from their more successful programs, the G8 states are picking up the tab. My only regrettes towards the G8 action is that it works through the disfunctional HIPC program. This means that in order to recieve the debt relief, the countries must still undertake World Bank/IMF mandated programs. Hopefully, the program will at least improve its reccomendations, focusing on improving education, medical care, etc. in rather than building unnecessary damns and the like.
The problem with this point of view is that these loans should never have been given. Most of them were given through a joint project between the World Bank and International Monetary Fund. Both organizations are backed by the G8 nations, the President of the United States is even responsible for appointing the World Bank president. They loaned money to the corrupt regimes of various brutal dictators. The dictators then spent this money on their lavish lifestyle, and in many of the cases were ousted from power. When they were ousted, they took the remaining money and ran. The people of the state never saw the benefits of that money. In fact, it was often used as an oppressive tool to prolong the reign of the cruel regimes.
While the people of the country never saw the money, the World Bank and IMF held the people responsible for paying back the debt. Thus, any future government had to spend the majority of their income paying back the debt. In some countries it was 80% of their tax income. When the governments were unable to make payments, the WB/IMF would give them another loan to make the payments through the HIPC (Heavily Indebted Poor Countries) program. These loans came with many strings attatched, pushing the government to undertake projects which were proven unsuccessful, putting the country into deeper financial arrears. The World Bank even admitted that the HIPC program was a failure, yet they continued to act as loan sharks demanding payments on their loans.
These loans should never have been given, and the World Bank and IMF should have been forced to relieve the loans themselves, using their rather large untaxed coffers. But, because this would have taken money from their more successful programs, the G8 states are picking up the tab. My only regrettes towards the G8 action is that it works through the disfunctional HIPC program. This means that in order to recieve the debt relief, the countries must still undertake World Bank/IMF mandated programs. Hopefully, the program will at least improve its reccomendations, focusing on improving education, medical care, etc. in rather than building unnecessary damns and the like.
posted by Mike M at 12:05 PM
0 Comments:
Post a Comment
<< Home