Facing down the debt

By Fr. Pat Kelly, S.F.M.
April 2000

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Did you ever tell anyone some bad news and then see their shoulders sag and their eyes take on the appearance of powerlessness and defeat? I had that experience in Guyana last year.

(Credit: Charlie Gervais, SFM)
Fr. Pat Kelly with a local merchant in the town of Charity where he serves.

During the five weeks of Lent, Jesuit Father Ben Parrott and I set up a seminar in five areas of the parish on the theme of Jubilee as found in the Book of Leviticus, Chapter 25. The seminar focused on the debt crisis that engulfs poor countries.

Little by little over the weeks, through small group discussions, the people focused on the reality of Guyana. The country has been designated by the International Monetary Fund as HIPC (a Highly Indebted Poor Country). In the seminar, Fr. Ben and I tried to explain how this beautiful, resource-rich country could be tagged poor and highly indebted.

The price of oil

Maybe you remember in 1973 when the oil producing/exporting countries cut back production and then doubled the price of oil. This created a crisis all over the world and caused a lot of suffering. (I was in the Philippines at the time and I’ll never forget the terrible impact this had on the lives of the poor.)

The tremendous amounts of money that came to oil-exporting countries was poured into Western banks. The banks, in turn, sought out new clients in order to earn interest on the vast pools of money on deposit.

Using this money, the banks lent out billions of dollars to poor countries at a small rate of interest, encouraging the governments of these countries to borrow as much as they wanted. Some nations’ leaders, like Zaire’s Mobutu, or Marcos of the Philippines, stole a good deal of the money. In other places money was used for projects that did not benefit most of the people. But the debt was owed by the whole people.

Interest rates soar

In 1981-82 the price of oil doubled again. The United States raised interest rates and thus the interest on the loans to the poor countries went from 5% to 21%. The average from 1981 to 1997 being 13% on the loans.

In 1982, 26 less-developed countries, starting with Mexico, said they could not pay the loans. So, the International Monetary Fund (IMF) and the World Bank lent more money to the poor countries, with conditions, in order to pay off the old debts.

Between 1981 and 1997 the poorer nations paid over US$2.9 trillion in interest and principal payments—many times more than the US$568 billion they owed in 1980—yet their total debt now stands at US$2 trillion!

Just imagine, UNICEF estimates that if US$9 billion was invested in social development, the lives of over 21 million children in sub-Saharan Africa could be saved. African countries cannot afford this investment because they pay almost one and a half times as much, US$13 billion, in debt service payments every year. African countries now spend four times more on debt repayments than they do on health care; and some of these countries are ravaged by AIDS.

Conditional loans

In the seminars we looked at the conditions put on countries before they are allowed to borrow more money.

1. One condition is to devalue the country’s currency. In this way a country’s products become cheaper for other countries to buy; therefore easier to sell, they say. But oil, machinery and all imports then become more expensive for the country to buy.
2. The debt must be paid in American dollars, so the poor country sells its natural resources to get these precious dollars. For Guyana, the debt can’t be paid in Guyanese dollars.
3. The government must cut social spending, so there is less money for education and for health care. Come to Guyana or any other Third World country and take a look at the schools and the hospitals.
4. The government must freeze wages, take away subsidies on basic necessities and let the market determine the price. In Guyana, the cost of even basic necessities is out of the reach of ordinary people.
5. The country must open up its borders to products from outside. Just imagine, in Guyana, chicken imported from the United States is cheaper than locally-bred chicken. Technology used in the United States for feeding, killing, and processing chicken lowers the cost of production. This, of course, destroys even the thought of a chicken industry in Guyana.

Foreign Aid

The people attending the seminar also heard that for every dollar given in aid to developing nations by the northern industrialized countries, three dollars comes back in the form of debt servicing costs such as interest payments. In Guyana at one time .60 cents of aid money (in American dollars) went to service the debt, with .40 cents used for the Guyanese people.

After the seminar which took place in Siriki on the Pomeroon River, I got in my little boat with its five horsepower outboard and headed back to Charity. A sadness came over me. I realized that the seminar was making these people, who are struggling as it is, even more beaten down. The hopelessness they must feel as they begin to see the powerful forces arrayed against them; forces over which they have no control. I was not looking forward to the next session of the seminar.

Boy, was I surprised. The next week the comments of the people gave me a lesson. Instead of being helpless and discouraged, talk centred on what could be done to rectify the situation.

I told them how a small group of people met in England in 1996 to talk about the coming millennium. The group came to the conclusion that the debt crisis was one of the greatest obstacles to the future of many peoples of the world. They initiated a petition campaign worldwide, calling for the cancellation of the debt of poor countries. The petitions would be presented to the leaders of the industrialized countries at their meeting in Cologne, Germany, in June, 1999.

At all five parish locations, the seminar participants grabbed hold of this idea. They divided themselves up to cover as big an area as possible to get signatures for the petitions calling for debt cancellation.

Good Friday offering

A suggestion was made that the petitions be offered at the altar on Good Friday. Veneration would be shown to Jesus for what He did, by the time and effort symbolized by the petitions. This was a campaign to bring Good News to the poor by calling for the cancellation of the debt of impoverished countries.

In all my life as a priest (since 1958) the ceremonies in the different places during Holy Week were the most moving. The way the people reverently put the petitions on the altar touched my heart and filled it with hope.

In a parish where Catholics number less than 10 percent of the population, the people collected 5,898 signatures. These became part of the more than 17 million signatures presented to the leaders of the industrialized nations on June 19, 1999.

This initiative was just the beginning. We hope that in the year 2000 the entire debt will be cancelled for all poor countries and Jubilee will be celebrated truly as a new beginning.

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