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Momodou
Denmark
11634 Posts |
 Posted - 01 Feb 2008 : 22:02:48
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Foroyaa Editorial
THE FACTS BEHIND THE DEBT RELIEF OF THE PARIS CLUB
The Paris Club comprises 19 Creditor Governments, namely, Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, Norway, Russia, Spain, Sweden, Switzerland, the United Kingdom and the United States.
These countries have formed a group comprising financial officials who meet every sixweeks at the French Ministry of the Economy, Finance, and Industry in Paris and is chaired by asenior official of the French Treasury.
The club developed as countries moved towards Independence and countries in the North tried to shield themselves from unilateral debt cancellation by countries in the south. The members of the club developed strong links with the IMF and the World Bank which establish performance criteria for debtors and then give recommendations for debt restructuring, debt relief and debt cancellation.
The Gambia has satisfied the conditions established by the IMF after falling behind by three years. The IMF and the World Bank recommended for Gambia to be offered debt relief by the Paris club.
This is why the SoS for Finance and Economic Affairs led a delegation to negotiate with representatives from the following creditor countries, namely, Austria, Belgium,Denmark, France, Germany,Italy, The Netherlands, Norway, and the United Kingdom. We are informed by the Department of state for Finance that the stock of debt owed to the Paris Club creditor countries amount to 40 million dollars, which is approximately 800 million Dalasi. If this is compared to a 22, 000 million Dalasi total debtthen one would realise that one is dealing with a small fraction of Gambia’s debt.
It goes without saying that, the Department could best help the people to understand the significance of the debt relief by issuing a press release indicating the categories of the stocks of debt owed by the country and the sum attributable to each category. This should then be followed by the cumulative stock of debtand the value of each relief package.
In terms of the Paris club, we are dealing with debts owed to governments and not the private sector.The fundamental lesson to learn from this is that the governments of the south are grossly indebted to the governments of the North. Let us consider Nigeria alone. It had to pay all its debts in 2006 which amounted to 30 billion dollars. This shows the amount of wealth governments are reaping through debts and interest payments as economic players, while some naïve African intellectuals are scheming how to distance African governments from productive ventures which could earn them income other than tax revenue.
Furthermore, the Department of state indicated two types of relief which had been granted. According to them, 11.6 million dollars out of the 40 million has been cancelled. This is equivalent to the sum of money the Gambia had to pay to GGC/Alimenta as compensation for the seizure of their business
The second relief is the cancellation of all loans signed and disbursed form the Paris Club Creditors before July 1986.
Thirdly, some countries like Austria have offered to cancel 86 per cent of debt servicing flows and retain 14 percent. France excludes the Loans to Gamtel and GRTS, Belgium and Netherlands also exclude some loans.
The sum that should have gone to the Paris Club Creditor Countries will now go to alleviate poverty.
It is therefore necessary for Government to establish a special poverty alleviation account at the Central bank where such moneys shall be paid and the public be constantly informed how the money is spent to alleviate poverty.
Source: Foroyaa Newspaper Burning Issue
Issue No. 14/2008, 1 – 3 February2008
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