The world's leaders gathering in Germany this week for the Group of Eight meeting will consider several proposals to ease the debt burden of poor countries. The need for debt relief has never been greater. The social and environmental consequences of this reverse flow of money are staggering.
Debt also diverts scarce resources from development needs such as health centers and schools.
In 1996 the World Bank and IMF announced a bold new initiative to reduce the debt of poor countries. Yet three years later, only three countries, Bolivia, Uganda, and Guyana, have actually received any debt relief. On the face of it, it merits support. But, as with most such proposals, the details are the problem. While the IMF is ostensibly asking permission to fund debt relief, only a small portion of the proceeds would go to debt relief.