Debt write-offs a tribune for social services delivery
Editorial
Guyana Chronicle
May 20, 2004
DENMARK'S cancellation of Guyana's debt to that country yesterday, as is each debt write-off and rescheduling, is a tribune for Government's programme of improved social services delivery and poverty reduction.
As Finance Minister Kowlessar stressed yesterday, Denmark's agreement to cancel a hundred percent of Guyana's commercial debt to Copenhagen up to December 2003 will free money earmarked for debt and/or debt interest payments for the financing of programmes to improve the delivery of social services to the Guyanese people.
Some critics don't read much significance into debt cancellation agreements. They feel budget resources ought to be generated from domestic output and foreign trade, and consider donor aid inflows the result of a desperate beg-for-alms policy by an administration incapable of inspiring the productive cooperation of its citizenry.
To the best of our knowledge, every country is aspiring toward some degree of self-reliance. But we don't know of any nation, big or small, rich or poor, that isn't trying to attract assistance.
When industrialized nations initiate policies to attract investments by wealthy Arabs or Asians, it's more than likely because those countries need the investments to cushion their deficits and/or enhance their ability to finance domestic and foreign-oriented programmes through tax collections.
Emerging nations such as Guyana need much more foreign investments than it is attracting at the present time. But it also depends a lot on bilateral and multilateral inflows - and debt reschedulings and debt cancellations - to close budget deficit gaps and to have more resources for its poverty reduction/living standards enhancement initiatives.
In late 1999 an organisation called Independent Forum for Debt Cancellation Negotiations (JDRAD) called on the G8 Group of Nations - eight of the world's most advanced nations - to cancel the unpayable debt of developing countries. JDRAD also made submission to the HIPC review process urging effective mechanisms "to ensure the resources freed from debt cancellation target poverty eradication."
Then, in the run-up to the IMF/World Bank Annual meetings in Washington, JDRAD produced a discussion paper outlining the case for the establishment of an International Insolvency Court (IIC) to pursue debt cancellation through what it called a "fair and independent process."
Perhaps, partly as a result of the organisation's initiatives, poverty reduction is now cited as an aim of HIPC, with estimates that some countries who had reached the point of completion by the end of 1999 would experience an aggregate debt service decline by 27 percent over the next five years.
We consider the debt cancellation agreement signed yesterday between Denmark's newly accredited Ambassador to Guyana, H.E. Christian Konigsfeldt, and Finance Minister Kowlessar at the Finance Ministry here, against this backdrop.
As our story on the debt cancellation agreement in this issue discloses, Ambassador Konigsfeldt said Copenhagen considered Guyana for the cancellation on account of the Government successfully reaching the Completion Point under the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative and committing to using its limited financial resources to enhance poverty reduction.
We trust that additional spending on social services and poverty reduction resulting from this debt cancellation accord will translate in our standard of living improving by a significant percentage sooner than later.