Publisher Name: 
Inter Press Service News Agency

Over a hundred countries in the developing world have taken to neo-liberal policies thanks to the insistence of creditors from the north, including the G8, the World Bank (WB), and the International Monetary Fund (IMF). But after 20 years, it is clear that these policies have not worked. The poor are poorer with their governments spending a lot of money to pay back loans, activists say.

Aminata Toure Barry from Jubilee South, an organisation working against globalisation and for debt cancellation, said that her country, Mali, has already paid eight times the loans it owes to creditors from the North. "But we are still continuing to pay. In fact, the loan principal has increased by three percent since 1980," she said at a seminar on The Debt Cancellation Trap by G8, the International Monetary Fund and the World Bank at WSF Karachi Tuesday evening.

While the living conditions of the poor in Mali continue to deteriorate, the Bank says that the solution to the problem is more debt, more neo-liberalism and more privatisation.

"This does not work," Barry said categorically. "Due to these policies, a bigger proportion of our population is without food, without schools and without health facilities."

The World Bank and the IMF have announced that they are cancelling debt owed by 19 countries, but critics say this is a trap.

"The conditions attached to the offer are dangerous," said Neil Tangri, an activist associated with Center for Economic Justice, India. "For the debt to be cancelled, they want the countries to implement more of the same policies that are impoverishing the people."

There is a different path to that prescribed by the G8, WB and the IMF toward debt relief. pointed out Tangri. "Let's declare that we don't owe them anything. Any country can pass a law and say that. Argentina has done just that."

A small debtor is owned by the creditor, but a big debtor owns the creditor. Countries like India and Pakistan can dictate terms with their creditors precisely because they are under a lot of debt.

After all, the poor countries did not come under debt due to some mistake of their own, pointed out Arjun Karki, president of NGO Federation Nepal. "The countries from in the north plundered our resources during centuries of colonialism. My own country, Nepal, has borrowed billions from WB, ADB and the IMF and has followed their policies for years," he said. "But look at where we are now. We have political instability, bad governance and civil war."

If history were to count, then the creditors of today probably owe more to the developing countries than vice versa.

Then why do governments refrain from taking up the issue and declaring that they don't owe any debt? Activists participating in the WSF Karachi pointed out the bitter fact that governments in poor countries are not always with and for the people.

"The governments keep borrowing every year as that means a lot of easy money for those in power," said Tangri. "For the lender, it does not matter where the money goes."

Even when post-disaster rehabilitation funds come to poor countries, it is often the rich that get the most, and not the poor and the affected.

"The only way to come out of this trap is total, unconditional and immediate cancellation of debt," said Anita Rampal from India. "Let's make a statement: we don't owe anything, and we are not paying back anything."

AMP Section Name:World Financial Institutions