Forgive us our debts...

This is Gordon Brown, who serves as the chairman of the International Monetary Fund's International Monetary & Financial Committee, yesterday at the opening of the committee's meeting in Washington, DC.  He announced that the IMF is committed to cancelling $40 billion of debt from 18 of the world's poorest nations, including Nicaragua.  This is good news but must be met with accountability and transparency by the governments of these countries. 

Oxfam's Max Lawson called the agreement "a real breakthrough."

"The deal that has been sealed by the Fund this week end will provide urgently needed money for education and health care. Eighteen countries will now have all their debts to the IMF cancelled."

 

Comments

[Connie]

Hey, I think that is great but how does cancelling debt make money available? Usually if a debt is cancelled it puts a person back at zero not in the black.

Connie

[Goyo]

That's a good question. I've heard it explained that under the debt relief agreement the countries still have to make the interest payments that they were already making but that only now the money goes to a prearranged fund which covers building up their infrastructure (like education, highways, etc.) But I would imagine that the devil's in the details...I would love to see the IMF's plan for this. I'll do some further investigating and post on this again.

[polloman]

NPR covered this and were talking about how the countries could now spend money on schools infracstruce etc. Wasn't that what the money they originally got supposed to be for?

[Goyo]

They were paying off huge interest payments...in Nicaragua's case it was supposedly $10 million USD a week. The IMF and World Bank have programs designed to get the money to where it needs to be (Strategic Adjustment Programs, I think they're called). But still I am curious as to how it will work out in readidad. Trying to be positive & hopeful, however!

[connie]

10 million a week in Nicargua would go a long way. I don't want to be too negative but I am thinking maybe it is like here in the States when a road gets built a very large percentage of the cash ends up in a few pockets. Like the pocket of the guy who happens to one the block company or the asphalt plant. Just a thought