There’s No Escape
Eight African countries, which escaped the debt trap as a result of a novel debt-forgiveness arrangement last year, have raked up new debts that are equal to the amounts that were forgiven. This was disclosed by a new report from the World Bank, released this month. All the eight countries, the World Bank/International Monetary Fund report says, were part of the Highly Indebted Poor Country program. The eight countries are Rwanda, Ethiopia, Uganda, Tanzania, Mauritania, Burkina Faso, Ghana and Mali. Nigeria was excluded from the HIPC list, despite the pleas of her officials then, because her creditors said she was not a low-income country. The report entitled, ‘An Evaluation Update of the HIPC Initiative Debt Relief for the Poorest Countries’, was prepared by the World Bank Independent Evaluation Group. It says the affected countries’ debt to export ratios (a measurement of a country’s level of indebtedness) have outgrown the HIPC debt-safety threshold of 150 per cent.
‘The Enhanced HIPC Initiative has reduced $19 billion of debt in 18 countries, thereby halving their debt ratios. But in 11 of 13 post-completion-point countries for which data are available, the key indicator of external debt sustainability has deteriorated since completion point. In eight of these countries, the ratios once again exceed HIPC thresholds. The effect of improved exports and revenue mobilisation on debt ratios has been offset by new borrowing,’ the report says.
rastafarispeaks.com