Wednesday, 8 December 1999

Debt and Development: Ghana - a case study

By Stuart Simpson, p. 2.

Oxfam, among others, has drawn attention to the fact that debt relief figures mislead the public. The criticism levelled, that debt relief is financed from current aid budgets is correct, but doesn’t go nearly far enough. The way debt relief is measured is far more problematic. Current aid figures that include the present value of debts reduced or cancelled imply vastly greater aid flows to the developing world than are actually taking place. The reduction in annual spending to service debts (interest payments) is a much smaller figure than the present value of the total debts forgiven. Developing countries need large amounts of cash now, not small savings in interest payments over the course of a generation. It is dishonest for world leaders to continually quote the present value of debts forgiven, as if all this money is now available to spend on new roads or power stations.

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