Liberia
Liberia bought back $1.2 billion in debt today at a 97% discount, “the steepest ever negotiated on developing country commercial debt.”
From the World Bank:
“The deal was concluded with the payment of $38 million to retire 25 outstanding commercial claims. The World Bank contributed half of this money through the International Development Association (IDA) Debt Reduction Facility, and Germany, Norway, the United Kingdom, and the United States contributed the other half.
“The successful resolution of this inherited debt, which had ballooned through interest and penalty charges during a period when my country was wracked by civil war, is an important step on our road to recovery,” said Liberian President Ellen Johnson Sirleaf. “This puts us on a firmer footing to attract investment and accelerate economic growth.”
Expect more from ONE soon on this amazing update.
-Virginia Simmons
Today the Washington Post is running a great op-ed by President Ellen Johnson-Sirleaf of Liberia. In the piece, the President talks about how the financial crisis threatens Africa’s turnaround and she also weighs in on how development assistance – along with stronger African leadership and better governance — has contributed to important progress in Africa over the past ten years.
President Sirleaf’s commentary is directly relevant to the current debate about the value of aid. She makes clear that aid has been an important component in Africa’s recent progress and cutting aid would have negative effects on poverty and stability on the continent. Thus she provides a very different view from that offered in the new book Dead Aid:
While international attention has been understandably focused on events in Darfur, Somalia and Zimbabwe, countries across the continent including Ghana, Tanzania, Mozambique and Liberia have been quietly turning around. Economic growth rates regularly exceed 5 percent in many nations. Since 2000, 34 million more African children are in school. More than 2 million Africans are on lifesaving HIV/AIDS medicines. Malaria deaths have been halved in Rwanda and Ethiopia, and the disease has been virtually eradicated in Zanzibar. Poverty rates are falling fast, from 58 to 51 percent across the continent in just six years, according to the World Bank.
The key to this progress is stronger African leadership and more accountable governance. Today, more than 20 African countries are democracies, up from just three in the 1980s; they have competitive elections and improved human rights, and their news media are much freer. These efforts have been supported by increasingly effective development assistance from the United States and other partners.
The citizens and leaders of donor nations should recognize how important their assistance has been to the new leadership in Africa and how appreciative most Africans are for this partnership. Critics say that African economies are shrinking, that poverty is rising and that failing aid is the culprit. But this argument is at least a decade out of date. Africa’s turnaround is real, the evidence indisputable. Africans themselves have been the key to this reversal, but more effective aid has played an important role. Reducing aid would slow private-sector growth, stall poverty reduction, and undermine peace and stability in countries that are struggling to become part of the global economy.
-Kathy McKiernan
I thought I should share some inside skinny on the week we spent in New York September 22-26 at the UN’s special summit on the Millennium Development Goals. We went there to try to attract some attention to – indeed celebrate – the efforts against extreme poverty in recent years, and to call for an acceleration of that progress.
Bono was frantically blogging for the Financial Times in every spare second throughout the week on his way to and from meetings with various leaders. The meetings were many: with Spanish President Zapatero to plan for their E.U. presidency in 2010; with President Ellen Johnson-Sirleaf of Liberia to discuss their remaining private commercial debt (think that’s sorted now); with UK Prime Minister Gordon Brown to push on the overall Millennium Goals project; and with President Sarkozy of France and President Barroso of the EU to push Europe on delivering an extra billion euros from the EU budget to fight hunger and invest in agricultural productivity in Africa. Bob Geldof arrived a few days into the melee and participated on the opening panel of the Clinton Global Initiative, popped up on CNN, and met with Mayor Bloomberg, Bill Gates and others along the way.
One highlight was unveiling our “Celebrate Accelerate” video to a crowd of activists and leaders (including Bill Gates, Bob Geldof, Jeff Sachs) honoring the “quietest storm in town”: the UN Secretary General Ban Ki Moon. Another, was dropping in on the “In My Name” launch where we regrouped with will.i.am and other activist allies.
An important part of the week was passing over ONE members’ hunger petition, with 50,000 signers, to Bob Orr, the Assistant Secretary General. The petition targets Ban Ki-moon, and all the G8 leaders, asking them to finance the current $1 billion gap in worldwide agricultural financing.
In addition to all of this, Kim Smith and a team of staff and volunteers brought the ONE Bus to town and, thanks to Mayor Bloomberg, parked it in some highly visible locations in the city.
By September 26th, it was clear it had been a decent week. In total there were $16 billion worth of commitments, some old, and some new, focused largely on building upon success to get more kids in school; eliminating malaria deaths by 2015 (yes, that’s got chutzpah – but by acting together it can be done); and renewing efforts against maternal mortality and hunger.
By investing in the fight against extreme poverty we can create new and stable markets where currently there are none; build strong global growth engines that can keep the global economy going when some of us falter; ensure strong health systems; and ensure that other’s instability doesn’t become ours. Above all – because it’s morally the right thing to do.
So now this piece of the campaign goes on to upcoming votes in Brussels on agriculture funding, and a key meeting about financing for development that is happening in Doha, Qatar, in the Middle East, at the end of November. We’ll keep you updated on both.
-Jamie Drummond
Thank you again for all the work you all have done to help move Liberia’s debt cancellation forward. There have been some questions about the future use of this debt cancellation money. I want to provide with you some facts and figures.
First, in order to qualify for the HIPC (Heavily Indebted Poor Countries) debt cancellation process that Liberia has now entered, a country must establish a track record of macroeconomic stability and must have a national poverty-reduction plan. That Liberia met these two requirements so quickly after such a prolonged period of conflict (their 14-year civil war) is a testament to their early success and the leadership of President Johnson Sirleaf.
Second, debt cancellation has proven to be an effective means of delivering poverty reduction. Some success stories:
- In 2005, Nigeria spent $750 million of $1 billion in debt relief through a tracking system (the “virtual” poverty fund) that monitored and tracked the flow of funds to poverty-reducing activity and evaluated its impact. This money was directed to education, health and infrastructure projects.
- For every dollar freed up from debt services, African governments have increased social spending by twice as much.
- Overall expenditures on poverty reduction in all HIPC countries increased from $14.8 billion (9.3% of GDP) in 2005 to 16.7 billion (10.2% of GDP) in 2006.
Below is a chart that graphically depicts the impressive increases in poverty-reducing expenditures in countries that have past “completion point” in the HIPC process.
-Josh Lozman, ONE Vote ’08 Policy Director
As Steve Radelet reported here on the ONE Blog on Monday, after a 18 month delay, the IMF is finally moving ahead with debt relief for Liberia!
Yesterday, the director of the IMF’s External Relations Department issued a statement::
“We have received a large volume of emails on this topic, so this letter is being posted because it is impossible to respond to each message individually….Their strong support to the cause of debt relief contributed to the broad donor support that made this financing possible.”
Jubilee, DATA, the Center for Global Development, Foreign Policy In Focus, and U.S. Conference of Catholic Bishops did incredible work keeping up the pressure, and ONE members sent tens of thousands of emails pushing the IMF for this action.
It’s not a bad day – when we get proof that our voices are being heard, and that our actions are truly making a difference for the poorest people in this world.
Read the full statement on the IMF site.
-Virginia Simmons
To all,
The IMF has finally come up with its financing arrangements, after 18 months of pushing and prodding. This is not yet debt relief – it just allows Liberia to now (!!) start the process. But is the big first step.
Thanks to all. You folks really were a big piece of this. It is amazing, but they really did need to be whacked over the head in public to go and get it done!
Thanks!
-Steve Radelet, Center for Global Development
More info in the IMF 11/12/07 press release:
“IMF Managing Director Dominique Strauss-Kahn Announces Financing Milestone on Debt Relief for Liberia”
Yesterday, President George W. Bush announced the 2007 recipients of the Presidential Medal of Freedom, the Nation’s highest civil award.
Among the 7 recipients is Liberia’s President Ellen Johnson Sirleaf.
From the White House’s press release:
Ellen Johnson Sirleaf has helped heal a country torn apart by conflict through perseverance, personal courage, and an unwavering commitment to building a more hopeful future for her homeland. The first woman elected president of an African nation, she has worked to expand freedom and improve the lives of people in Liberia and across Africa.
Importantly, last week tens of thousands of ONE members took action urging the IMF to provide Liberia the debt relief the institution owed the country 18 months ago. More info on that here and here.
