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Friday, June 2, 2023

Honduras, Nicaragua Benefit from G8 Debt Cancellation

LONDON (EFE) – The Group of Eight,or G8, the world’s seven most industrializednations plus Russia, agreed in London lastSaturday to cancel immediately “100%” ofthe multilateral foreign debt of 18 poorcountries, including Latin America’sBolivia, Honduras and Nicaragua.Although the terms and conditions ofthe debt cancellation are still unclear,Nicaraguan and Honduras are alreadysinging hallelujahs.Nicaragua’s Finance Minister, MarioArana, was quick to thank the G8. He saidthe debt forgiveness would give his countrysome “fiscal breathing room” and allowthe government to dedicate more money tosocial spending.The G8’s debt forgiveness for Nicaraguacould bring the country’s total debt cancellationto $1 billion, $610 million of which hadalready been wiped out by the InternationalMonetary Fund (IMF) and World Bank,under the Highly Indebted Poor Country’sInitiative, or HIPC.HONDURAN Finance MinisterWilliam Chong Wong, meanwhile, estimatedthat the G8 initiative would translateinto $1.7 billion in debt forgiveness for hiscountry.Including another debt-forgivenessplan that Honduras is working on with theWorld Bank, Chong Wong estimates thatHonduras’ total foreign debt could bereduced by a total of $2.3 billion, down toa more manageable $500 million, in thenear future.Nicaragua and Honduras are seekingclarification on the terms and conditions ofthe G8 debt forgiveness to determine theexact amount of its benefit to each nation.NICARAGUA this week also receivedword that the United States government onMonday accepted its budget proposal for theMillennium Challenge Account, which willearmark $175 million in grant money forrural development projects during the nextfive years in the northwest departments ofLeón and Chinandega.Nicaragua will use the MillenniumChallenge Account funds to lay 152 kilometersof road, resolve 43,000 pending landdisputes, reforest 17,300 acres of dry forestand support new agricultural production projectson 12,100 acres of unused land, accordingto a Casa Presidencial statement.Honduras last month was the firstcountry in Central America, and second inthe world, to qualify for the MillenniumChallenge Account, netting $215 millionfrom the U.S. fund (NT, May 27).WHILE the debt forgiveness may nothave the same immediately obvious benefitsto the population as the MillenniumChallenge funds will, it is being recognizedas an historic opportunity forHonduras and Nicaragua to redirect statespending in the long term.Speaking at a press conference in hisrole as host of the two-day summit of G8finance ministers, British Chancellor ofthe Exchequer Gordon Brown said a totalof $40 billion of the 18 nations’ debtwould be canceled.The first beneficiaries of Saturday’sdecision are Benin, Bolivia, Burkina Faso,Ethiopia, Ghana, Guyana, Honduras,Madagascar, Mali, Mauritania, Mozambique,Nicaragua, Niger, Rwanda, Senegal,Tanzania, Uganda and Zambia. Thosecountries are 18 of the 38 poorest countrieson the planet.In 12-18 months, another group of ninenations is scheduled to be accepted into thedebt-cancellation plan, totaling an additional$11 billion. A third group of 11nations in the throes of civil war are in linefor debt cancellation once conditions outlinedin the program are met.GUATEMALAN President OscarBerger has already announced that hewould like his country included on theG8’s first list of nations slated for debt forgiveness.In declarations to the press this week,Berger explained that Guatemala wasunfortunately excluded from the firstround because its per-capita income isabove that of the other 18 countries – a sadstate of affairs considering an estimated80% of Guatemala’s 12 million inhabitantsare poor.Berger said if he were unable to convincethe G8 to pardon 100% of his country’sdebt, he would at least seek to lowerinterest rates.IN all, the 38 nations included in theHIPC initiative launched by the WorldBank in 1996 owe $55 billion to internationalbodies, $44 billion of that to theWorld Bank, $6 billion to the IMF and$5 billion to the African DevelopmentBank.According to Brown, donor countriesagreed to provide additional funds to themultilateral institutions to make up fortheir loss of income.He said the deal is the “most comprehensive”agreement on debt relief everachieved at a G8 conference.“This is no time for timidity, but forboldness,” said Brown, whose country currentlyoccupies the rotating chairmanshipof the G8, made up of Britain, Canada,France, Germany, Italy, Japan, Russia andthe United States.BROWN explained that the debt cancellationis contingent “on the countries’adoption of measures regarding transparencyand the struggle against corruption,”so as to ensure the money saved –some $1.5 billion a year in debt repayment– will be spent on education,health and other areas.The meeting’s final declarationdescribes as “essential that developingcountries implement policies that fostereconomic growth, sustainable developmentand poverty reduction.”It also mentions as prerequisites “transparent”finances and institutions and “economicstability” to foster private enterpriseand attract investment.


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