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Don't Let South Sudan be Born into Debt

 

Last week Jubilee Debt Campaign officially launched its campaign to reform the Export Credit Guarantee Department. As we wrote, little is known about the ECGD and it’s role in protecting business interests at the expense of poor countries.

And what of new countries? Is it fair that they are burdened with debt from the beginning? This isn’t just theory. It’s real.

Last month Southern Sudan held a referendum to determine whether the region should remain part of Sudan or not. Last week the official results were released with 98.83% voting in favour of independence.

Southern Sudan will come into existence on 9 July 2011. As a new state, it’s only fair that Southern Sudan start with a clean slate.

Free of debt.

However, this is not the case. Sudan currently has a debt of $35 billion, of which $20 billion is interest on original loans1. Among the celebrations of becoming a new country Sudan now has to negotiate on what to do with this debt.

Nick Dearden, Director of Jubilee Debt Campaign forcefully argues,

"South Sudan should not inherit unjust dictator debt from the north. Current debt relief processes are not acceptable - they will simply force south Sudan into a time consuming programme, full of illegitimate conditions, which allows borrowers to collect interest on deeply unjust debts’.

In this, the UK is owed $1 billion to the Export Credit Guarantees Department. The ECGD does not say where this debt came from. All we know is that this debt is over 30 years old originating from before 1980. And, since 1984, it has been charged at an interest rate of between 10 and 12 per cent, immensely inflating the debt2. 90 per cent of Sudanese debt owed to the UK is interest. To quote Nick in full;

"The UK is claiming Sudan owes £650 million for a debt which may have been as small as £55 million in 1984. If this debt is cancelled the UK will call the whole amount aid, and use it to meet aid targets. Yet the debt is made-up money based on ridiculously high interest rates. The UK government needs to conduct an audit of all debts owed by developing countries to reveal if loans damaged human rights, development or the environment, and to expose usurious interest rates."

It’s a matter of justice.

Southern Sudan should be entitled to use its significant natural resources to develop its society. The revenue generated should be spent on critical infrastructure and lifting its people out of poverty. It should not be put towards repaying debt charged at exorbitant interests rates.

Having chosen independence, the people of Southern Sudan deserve to begin their new lives standing on their own feet. It is not fair for them to be on their knees.

Join the Jubilee Debt Campaign to put an end to this unjust debt.

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[1] World Bank and IMF. (2010). Sudan: Joint IMF/World Bank 2009 debt sustainability analysis. IDA and IMF. 07/06/10.
[2] ECGD. (2011). Response to Freedom of Information Request. ECGD. 07/01/11.
 

Comments

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