AN OPEN LETTER

To: The African Union Summit

Banjul, The Gambia

Your Excellencies,

RE: THE DEBT QUESTION: ONE YEAR AFTER THE G8 GLEANAGLES’ PROMISES

The African Forum and Network on Debt and Development (AFRODAD), a Pan African regional network of NGOs working across Africa is writing this letter in support of your calls for universal total debt cancellation to all African countries, and is calling for further action one year later after the G8 promises on Africa’s Debt. We urge our leaders to continue keeping Africa on the G8 agenda.

Cognizant of the significant progress that has so far been made in 13 of Africa’s Heavily Indebted Poor Countries (HIPCs) are benefiting from the multilateral debt relief initiative (MDRI), we demand the following:

African Union to the G8

We call upon you to raise these issues within relevant international fora including the forth-coming G8 Summit in Russia.

· A deeper and wider Debt relief with no conditionalitities. More countries in Africa have been excluded from the MDRI yet they need it for the attainment of MDGs. Otherwise, we need to have a fair and transparent arbitration process under the auspices of the United Nations or simply repudiate the debt.

· An unconditional and total cancellation of the illegitimate and odious debts of the Democratic Republic of Congo to give them a fresh start as they undergo elections this year.

· An unconditional total cancellation of the national debts which stands as a stumbling block to efforts of the new government to rebuild the country and its shattered economy. This will give chance to the wanted peace and allow Liberians to move on with their lives.

The African Union

We also urge you as a Union of African States gravitating towards regional integration to do the following;

(i) Speed up the creation of a Fund to help cushion non-oil producing countries from the rising oil prices.

(ii) Ensure that MDRI Beneficiaries avoid new debt problems by putting in place universal open, accountable and transparent loan contraction processes and debt management systems. This in some cases calls for the reform of institutional, legal and structural frameworks. As CSOs we are prepared to assist in this regard.

(iii) Ensure that additional resources released from debt relief are used to increase social spending on health and education, develop infrastructure and promote local private sector development.

(iv) We believe that African regional integration will not make sense without national and regional Polices on Debt and Aid.

(v) We call upon you to critically assess and cautiously negotiate with the European Union on Economic Partnership Agreements (EPAs). Again, CSOs remain yours for consultation and advice. We believe that you will not mortgage the future of our current and future generations in so doing.

We also wish to draw your attention to the following urgent implementation issues:

MDRI Cut-off and Implementation Dates: For post-completion HIPCs, implementation date should have been 2nd half of 2005. But the IMF and AfDB chose end-2005 while IDA’s own is July 2006 – for the stated reason of aligning it with its financial year. An earlier cut-off date means lower cost of MDRI implementation and lower benefits to the HIPCs.

For IMF & AfDF, all pre-2005 debts are eligible. For the World Bank’s International Development Association (IDA), only pre-2004 debts are eligible so as to save IDA up to US$5.3bilion and short-change the HIPCs by about the same. Delayed implementation date means lower implementation costs and, hence, reduced benefit to the HIPCs. As CSOs, we believe that it is your right to demand IDA to shift its cut-off date from end-2003 to end-2004, in line with its AfDF and IMF counterparts. Reimbursing the HIPCs for debt service payments made during the waiting period can do this.

For the pre-completion HIPCs, implementation date is country-specific, depending on when the HIPC completion point is reached. It can take very long before reaching the completion point, with the average duration being about 6 years, from past experience, as countries have to pass through the IMF’s PRGF programme which is the major delaying factor. As you know, justice delayed is justice denied. There is urgent for the Africa Union to prevail on IMF to streamline its PRGF program for this specific case, to enable HIPCs attain completion point on a fast-track basis.

“Remember, we are Africans not because we are born in Africa but because Africa is born in us”

For further information, see: www.afrodad.org