Letter to Secretary of the Treasury Snow on Debt Cancellations for HIPCs, January 27, 2005
January 27, 2005
The Honorable John Snow
Secretary of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220
Dear Secretary Snow:
As you prepare for the upcoming meeting of G-7 finance ministers in London, I am writing on behalf of the United States Conference of Catholic Bishops to express my support of proposals for up to 100% cancellation of the debt of the heavily-indebted poor countries (HIPC’s) to multilateral creditors. My sincere hope is that that the G-7 meeting can be a time of decisive action to complete the unfinished agenda concerning debt relief for the world’s poorest countries.
An agreement on multilateral debt cancellation would be a most important complement to the recent consensus that I understand has been achieved to provide new assistance by the International Development Association solely in the form of grants to a large number of the poorest countries. We congratulate you for your leadership on this issue.
Prior to the annual meetings of the World Bank and International Monetary Fund last October, I wrote to urge action on the debt problem. I realize that it was not possible to reach an agreement on new debt relief at that time, but the G-7 meeting next month presents a new opportunity to reach a consensus on the way forward. For us, the debt burden of the poorest countries is a matter of urgency. Current levels of debt repayment coupled with a high degree of vulnerability to external shocks continue to leave poor countries in danger of serious setbacks along the path to poverty reduction and sustainable human development.
This vulnerability was brought to our attention in dramatic fashion by the devastation wrought by the horrendous tsunami in South Asia. We applaud the Administration for its generous response and its leadership in the recovery and reconstruction effort. However, this tragedy highlights the pressing need to address the unsustainable debt burdens of the HIPC countries and a number of other poor countries, most of whom, we believe, have an even weaker capacity to deal with the effects of external shocks than the countries affected by the tsunami.
At the same time, we reiterate our hope that multilateral debt cancellation is provided in a way that does not merely substitute for other aid but provides additional resources. This is a particular concern because debt cancellation ought not to be about adjusting accounts but about combating poverty. We urge that the debt cancellation be financed through new resources from the donor countries and from other sources, such as for example, IMF gold holdings.
Also, we note from the analysis underlying the new consensus on grant financing that a significant number of very poor countries that are not eligible for the HIPC program are suffering from debt distress to the same or even a greater degree than the HIPC countries. In the interest of fairness, we would urge that, in addition to the HIPC countries, those other countries that will now be eligible for grant financing be eligible for inclusion in the debt cancellation proposal.
Our support for debt cancellation stems from our moral obligation to promote the life and dignity of every human being, especially the most vulnerable. Our brother bishops in Africa and Latin America tell us that debt payments are draining resources badly needed to improve the lives of the poor. We believe the proposal of up to 100 percent multilateral debt cancellation is the most important initiative on poor country debt by our Government since the enhanced HIPC program was introduced. We look forward to action at the G-7 finance ministers meeting on a debt relief program that will offer new hope to some of the world’s poorest and most forgotten people.
Most Reverend John H. Ricard
Bishop of Pensacola-Tallahassee
Chairman, Committee on International Policy
United States Conference of Catholic Bishops