Debt Cancellation
Debt Cancellation Program on 12th May 08
SUPRO launched campaign on Cancellation of External Debt of
Bangladesh SUPRO launched a campaign targeting G8 summit to be held in
Hokkaido, Japan in July 2008 on External Debt Cancellation and increased
allocation and quality services on education, health and water & sanitation
in order to achieve MDGs. The launching program took place on 12 May 2008 at National Press Club, Dhaka.
The meeting was attended by leaders of major political parties, CSO leaders,
academics, researchers, professionals, activists, media personalities and
representatives of grassroots level NGOs. SUPRO presented findings of its
recent study titled “External Debt- at the cost of Essential services? Bangladesh
needs full Debt Cancellation” with a view to developing a national consensus
and strategizing the campaign both at national and international level. A
strong consensus has been developed among the participants of the consultation
meeting that calls for immediate cancellation of external debt, G8 leaders
should immediately take action for debt cancellation of Bangladesh.
Participants also opined that the external aid in the form of loans and grants
has misguided the nation through giving false prescriptions. Mr. Minar Pimple -
Deputy Director, United Nations Millennium Campaign (UNMC); former state
minister for Civil Aviation Mr. Abdul Mannan; Mr. Mahbubur Rahman, Advisor of
Bangladesh Nationalist Party (BNP); AKM Jahangir Hussain, former minister of
Jute and Textile Minister; Mr. GM Kader of Jatiya Party; Nurul Islam Nahid of
Bangladesh Awami League; Mozahidul Islam Selim, General Secretary of the
Communist Party of Bangladesh; Mr. Hasanul Haque Inu, president of Jatiya
Samajtantrick Dal; Piyas Karim, professor of BRAC University and Imtiaz Ahmed,
professor of International Relation of Dhaka University were present among
others.
The major findings of the study are as follows:
- The Government of Bangladesh (GOB) is spending more on External Debt servicing than education or health. In 2007, Bangladesh spent almost 25% of its Revenue for external debt servicing while spending 15.65% and 5.89% of its revenue expenditure on education and health respectively.
- As of June 2007, total outstanding external debt stood at US $20713.1 million of which Medium and Long-term External Debt (MLT) mostly taken from the Multi-lateral and bi-lateral donors including G-8 countries is US $19354.8 million i.e. almost 97% of the total debt outstanding.
- According to the official statistics, overall external debt servicing rose from $892.7 million in 2001 to $1551.3 million in 2007 showing almost 65% increase during the last 7 years. Medium and Long-term debt servicing also shows a rising trend amounting to on an average $875 million from 2001 to 2007.
- Every year Bangladesh pays, on an average $ 1070 million, to its foreign creditors.
- Per-capita debt obligation has increased from $6.56 in 1974 to $147.32 in 2007.
- Stringent policy conditionalites (i.e. privatizing essential public services enterprises, trade liberalization, deregulation of market etc.) are attached with loans taken from bilateral and multilateral sources further exacerbating the situation that utterly denies the people’s right.
- For every dollar in foreign grant aid received, the government spends over $1.5 in debt service to foreign creditors annually.
- Bangladesh needs US$ 7.5 billion a year to finance the implementation of the MDGs. Bangladesh can no longer afford to pay a single dollar for debt servicing. Because….. “Every dollar paid in debt service is a dollar lost for the MDGs”.
- If debt sustainability is based on the financing needs for the MDGs, rather than WB-IMF proposed criteria, Bangladesh would receive full debt cancellation.
- Bangladesh needs more foreign assistance not only to finance the essential services and MDGs but also to mitigate the adverse effect of climate change for which the international community is liable to a great extent. The adverse effect of climate change may wash-away the progress Bangladesh ahs already achieved as far as the MDG targets are concerned.