Oxfam: Debt Cancellation

A new report from Oxfam today shows that decisions made at last year's G8 have led to real improvement in the lives of some of the world's poorest people. However, Oxfam is concerned that while debt cancellation is starting to be delivered, the growth in aid in key G8 nations is not enough to meet the promises made at the Gleneagles G8.

The report comes as G8 Finance Ministers, including Gordon Brown, meet in Moscow today to prepare the ground for the leaders' summit in St Petersburg next month. It reveals that while official figures show large aid increases in 2005 and 2006, this is only a temporary spike caused by the inclusion of a substantial one-off debt cancellation deals for Nigeria and Iraq. When these deals are no longer part of the equation at the end of 2007, aid figures will plummet unless the finance ministers change gear on the present rate of aid increases.

Oxfam's director Barbara Stocking said:

"The debt cancellation brokered at last year's Finance Ministers' meeting in London is already helping to deliver essential health and education services but G8 governments must not continue to double count debt cancellation as part of their aid budget."
True aid figures continue to be obscured because official figures still count debt cancellation deals as new foreign aid. Four years ago, at the Monterrey Financing for Development conference, rich countries promised to stop this double counting. Despite their promise, the practice remains unchanged.

Stocking continued:

"The UK government must use its influence to ensure that G8 countries deliver both debt cancellation and increased aid if they are to make poverty history. The millions of people who campaigned for an end to poverty last year will be watching the G8 leaders carefully to ensure they keep their promises."
Last year the G8 promised to increase aid by $50 billion annually by 2010. Although this represents only 0.36% of GNI compared with the O.7% promised at the UN thirty years ago it could pay for every child to go to school and save the lives of 500,000 women who die each year in pregnancy or childbirth. Oxfam's report indicates that all G8 countries, including the UK, must announce clear timetables to increase their aid to meet the 2010 Gleneagles commitment.

Barbara Stocking added:

"At the current rate of progress real aid is not rising nearly fast enough across the G8 countries to meet their Gleneagles aid commitment to increase by $50 billion by 2010. The G8 must make clear how and when they will deliver real aid increases, to pay for vital services such as health and education."

Since the Gleneagles G8, the UK has played a critical leadership role in increasing its aid to Africa and securing new international commitments for more aid to education, increasing its own aid to the Education for All Fast Track Initiative. However Oxfam argues that the UK government needs to look closely at its own record to ensure the aid budget rises in line with the promises they have made.

ENDS

Notes to editors:

Footage is available of schools in Zambia and hospitals in Malawi

The report shows that according to OECD figures, aid (minus debt cancellation) has gone down in Germany, France and the UK. In the UK this figure rises to + 7% when payments to the Commonwealth Development Corporation IN 2005 are deducted. Although real aid in the UK is rising, it is not rising fast enough to meet the UK commitment of 0.7% GNI by 2013.

19 countries, including 13 in Africa, had all their debts to the IMF cancelled in January 2006, and are directing the savings to poverty reduction. Cancellation of their debts to the World Bank and African Development bank will follow in July 2006. When fully implemented, the G8 debt cancellation deal will save poor countries $1.5 billion dollars which they can invest in fighting poverty.