Sunday, October 03, 2004
Here is an interesting article regarding debt relief from the Economist. If you skip the first half of it about China and the G7 toward the end it talks about debt relief. This is something that Bono(lead singer of the Band U2) has been hammering on for a long time. A few years ago this initiative was called Jubilee 2000. The idea is to cancel all the debts of Heavily Indebted Poor Countries (HIPCs) in the year 2000. If you read this article you will see that Britain has already done just that. In case your wondering my opinion(and you are by default because you are reading my blog), I think it is a good idea with some reservations. I am not too keen on canceling debts for very corrupt leaders who are still in power. If you are a corrupt leader and borrow money foolishly, it should not be cancelled until you are no longer in power. The article mentions the disincentives that canceling loans my bring about. Why borrow money in a fiscally responsible manner if you aren't going to have to pay it back? Personally I would rather see more effort put into raising money for combating AIDS rather then debt relief, but overall I think it would be a good thing...as long as the loans for the most corrupt governments are not cancelled. How one goes about defining which governments are "corrupt" is beyond my meager brain. But I agree with Bono, it is a travesty for some of these extremely poor countries to be paying more in debt payments then they do on health or education. Cancel farm subsidies while you're at it.