Highly-indebted, poor countries should be allowed set aside funds for basic health and education needs before they are asked to make debt repayments, according to a Trocaire policy document published yesterday.
It criticises a Third World debtreduction initiative introduced two years ago by the World Bank and the International Monetary Fund. This plan, the Highly Indebted Poor Country (HIPC) initiative, aimed to bring poor countries' debts down to realistic levels.
The document claims the HIPC definition of what is a realistic or sustainable level is flawed. "The current definition measures countries' ability to repay debt in relation to their export income, irrespective of the level of poverty, and the investment required to fulfil basic human needs such as primary education and health care," it says.
"Instead, using a human development approach as outlined in this paper the financial resources needed to pay for basic needs - such as education and health - as well as for investment in productive capacity should be subtracted from a country's revenue base before any demands for debt repayments are met."
In 1997 Third World debt was over £1,500 billion, and in that year more than £160 billion was repaid in interest and loan principal.
The Trocaire document sets out an alternative approach to the debt issue which, it says, is consistent with the Organisation of European Co-operation and Development's target of halving the number of people living in extreme poverty by the year 2015.
Fine Gael's finance spokesman, Mr Michael Noonan, said international efforts to tackle the Third World debt crisis had been limited. "This report suggests that the money needed for basic services such as education and health as well as investment in business should be subtracted from a government's revenue before any demands for debt repayments are made. That makes economic common sense."
Trocaire's director said the world must take into account the human cost of the debt burden on poor countries. "In low-income countries it only costs $16 [per year] to provide health care for every person and a comprehensive primary school education would only cost $12 per pupil [per year]," Mr Justin Kilcullen said. "Yet even these paltry figures are too much to pay when countries are heavily in debt."
The policy document, A Human Development Approach to Debt Relief for the World's Poor, is the latest in Trocaire's North-South series of background papers published as part of the agency's research and development education programme.