Removing the debt burden

In this hemisphere, Guyana is one of three countries — the others being Honduras and Nicaragua — to benefit from this 100 percent write-off by the World Bank and the International Monetary Fund on the basis of a historic decision taken at last week’s meeting in London of the Group of Eight nations — the world’s most rich and powerful.

About nine other nations are to join the group of debt-ridden beneficiary countries during 2006. The removal of the debt burden involves about US$40 Billion.

While the entire group of finance ministers of the G-8 countries deserves to be commended for the decision after a long period of negotiations and representations from the debtor nations, Prime Minister Tony Blair’s government and Chancellor of the Exchequer Gordon Brown, in particular, have consistently demonstrated an enlightened approach to make the write-off deal a reality.

The Guyana Government, which has been quite successful over the past 11 years in reducing the country’s staggering debt burden of approximately BDS$2 billion it had inherited in 1992, would be quite encouraged by last week’s G-8 decision as it looks forward, like other Caribbean and Latin American nations, to further debt forgiveness by donor governments.

This development comes at a most challenging period for Guyana and other sugar-exporting countries of the Caribbean Community and the wider African, Caribbean and Pacific (ACP) states that are faced with a proposed 42 percent cut in the price for their sugar on the European market, over a two-year period, starting in 2006.

Already confronted with crushing social and economic problems, this is very bad news for the region’s sugar producing countries, especially Guyana, CARICOM’s biggest exporter for which the sugar industry remains its single largest provider of jobs and foreign exchange.

The European Union’s decision, which could cost an estimated annual loss in income of about US$45 million, was described last week by an official of the Sugar Association of the Caribbean as a "death threat."

This situation underscores the reality that while debt relief, particularly when it is 100 percent written off, is quite desirable, far more practical and enlightening would be for the rich and powerful nations to be forthcoming in adjusting their subsidies and protectionist policies to facilitate better terms of trade in goods and services from the poor and developing states.

There is also the shared concern, even among beneficiary countries, that other poor nations should not have to suffer reductions in aid because of the debt forgiveness identified by the G-8 group for the initial 17 highly indebted ones.