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Multilateral Debt Relief Initiative (Disadvantages (Undemocratic and…
Multilateral Debt Relief Initiative
Facts
World Bank and G8 nations cancelled all debts owed to the IMF, IDA and African development Fund debts
Aimed to help HIPC only (21 countries- 315m people)
January 6th 2006
$36 billions in 2006
Potentially $50b in the next 40 years
Disadvantages
Undemocratic and damaging strings attached
Exclude important regional development banks
HIPC includes too few countries
Designed and controlled by creditors
Cancelled at low rate( $1.25b a year is equivalent to0.2% of world spend on defense→ poor countries have no chance of meeting Millennium Development goal
The Jubilee Debt Campaign called for at least $10b of cancelled debt a year
Qualifications
Agree to IMF economic policy for 3 years
Agree to follow IMF for another 3 years
Prove that the debt is unsustainable
Advantages
25 million children are put into schools with $1.25b
Zambia: 4500 new teachers
Tanzania: subsidised food for 3.7 million
Increased spending on health, education and crucial areas to develop the economy
Uganda gets 80% of its debt cancelled