Stop Starving the World’s Poor to Pay Debts

“Must we starve our children to pay our debts?” asked Julius Nyerere, former president of Tanzania, three years ago. The Western world has answered: “Yes.”

The United Nations Children’s Fund (UNICEF) revealed in its “State of the World’s Children 1989” report that, “At least half a million children have died in the last 12 months as a result of the debt crisis and recession.” Austerity measures imposed on Third World countries by the World Bank and the International Monetary Fund often result in cuts in health and education budgets, dramatic price increases and rising unemployment, and the poor have been hit the hardest.

This week’s meeting of the World Bank and the IMF in Washington presents a real opportunity for these two institutions to adopt more poverty-oriented practices--changes that many consider essential.

The massive increases in Third World indebtedness came about in the 1970s as the revenues of the Organization of Petroleum Exporting Countries were recycled by commercial banks as loans to developing countries. That created a millstone, which grows heavier each year, around the necks of the world’s poorer nations. In 1988, for the sixth consecutive year, there was a net transfer of financial resources from poor to rich countries, reaching a new record of $33 billion, according to the United Nations’ newly published “World Economic Survey 1989.”

Fearing widespread default, commercial banks have virtually ceased new lending to poor countries. Debtor nations have been forced to turn to the World Bank and the IMF. These two institutions have developed policies to adjust the structure of nations’ economies so that they might earn enough from exports to pay the interest on their debt.

One of the most hard-hitting effects of structural adjustment comes from budget cuts, most notably in the areas of health and education. We have seen a deterioration (often from very low levels) of medical care, education and nutrition. For example, 25% of health workers were laid off in Jamaica due to cuts in expenditure, and in Mexico and Bolivia, health spending was cut to less than one-quarter of its 1972 levels. These cuts inevitably affect the poorest groups.

Poverty, hunger and malnutrition claim the lives of 14 million people each year. Of those, 70% are children under 5. UNICEF estimates that 50 million infants will die unnecessarily between now and the end of the next decade.

This relentless toll of young lives is but the tip of the iceberg of malnourished and stunted youth on whom the burden of future debt repayment will fall in years to come.

To rectify this situation, we urge the World Bank and the IMF to adopt the following proposals:

Ensure that all World Bank-supported adjustment programs include specific targets for improvements in key social areas, including the under-5 mortality rate, the female literacy rate, and others.

Structural adjustment policies should include measures that do not merely compensate the poor but bring positive benefit to the most vulnerable. Policies should be designed and implemented in consultation with public-sector agencies and local nongovernmental organizations, especially those with grass-roots involvement with the poor.

The bank should give greater priority to projects and programs that enhance the economic productivity of the poorest 20% of the population (e.g., access to land, irrigation, credit and so on).

A borrowing country’s efforts to reduce poverty should be a major and separate criterion for the allocation of assistance, including assistance in support of debt reduction. The bank should assist countries to develop and achieve national poverty alleviation plans.

It is important that the World Bank and the IMF begin to take serious steps to ensure that structural adjustment does not continue to worsen the plight of the poor--indeed, that it contributes to bettering their conditions.

This opportunity must not be missed. Millions of children’s eyes are full of hope.