Environmental dividend from debt cancellation discussed at UN-backed meeting
The question of how to use funds derived from debt cancellation to benefit the environment is being discussed by African ministers, along with banking officials and development partners, at a United Nations-backed meeting in Nairobi, Kenya.
"The environment is the economic basis for all our lives, especially the poor," said Klaus Toepfer, the Executive Director of the UN Environment Programme (UNEP).
The conference is bringing together ministers from across Africa whose nations have or will benefit from the G-8 decision make in Gleneagles, Scotland this year to cancel $40 billion of debt owed by poor countries to the International Monetary Fund (IMF), the World Bank, and the African Development Bank (AfDB).
With the IMF pitching in $6 billion, the United States $1.75 billion (over 10 years) and other rich nations pledging to cover $16.7 billion, poor countries are expected to save about $1.5 billion in debt payments every year, according to UNEP, which predicted the money will be spent on schools, health services, farming, and infrastructure.
"Targeted investments in 'natural capital' such as forests, water and land can be cost effective in helping countries meet internationally agreed goals," Mr. Toepfer said, referring in part to the promise by African nations to reach the Millennium Development Goals (MDGs), including halving poverty, reducing disease and improving literacy by 2015.
UNEP cited a number of ways the environment can play a role in social and economic well-being, pointing out that school attendance can be boosted by improvements in supplying clean water; malaria rates are likely to be affected by declines in deforestation, and agriculture can be improved through anti-land degradation measures.
Eighteen nations stand to benefit first, and 14 of them are in Africa, including Benin, Burkina Faso, Ethiopia, Ghana, Madagascar, Mali, Mauritania, Mozambique, Niger, Rwanda, Senegal, Tanzania, Uganda and Zambia, because they have reached the "completion point" according to the Heavily Indebted Poor Country (HIPC) initiative benchmarks launched by the IMF and the World Bank in 1996, UNEP said.
An additional nine African countries are at the "pre-decision" point according to HIPC metrics, allowing them to cancel debt within the next 2 years, and 11 additional countries could be eligible if they meet strict targets for good governance and tackling corruption, so that eventually 38 countries could get debt relief, UNEP said.
Between 1970 and 2002, Africa received $540 billion in loans. In that same period, Africa paid back $550 billion in principal and interest. By 2002, Africa had $295 billion in debt, said UNEP.