The offer of debt relief by rich industrialized nations to tsunami-hit Asian countries provides a ray of hope to other poor debt-laden nations, mainly in Africa, which for years have cried out for similar help.
Analysts said the concerted move by the creditor nations to help the devastated economies in south Asia could put debt relief or write-offs for these struggling nations center-stage on rich nations' agendas.
"There is an effort being made to move the debt relief agenda forward. The tsunami itself is providing a context within which the debt relief agenda can sustain the move forward," said Edward Clay, senior research associate at Overseas Development Institute (ODI).
Japan is the latest country to join the growing list of nations, including Britain, the US, Germany and France, calling for a freeze on debt repayments by tsunami-hit Asian nations.
But some analysts said while the move to offer debt relief is a magnanimous gesture on part of rich nations, countries like India, Thailand or Indonesia are fiscally sound enough to pay off their foreign borrowings. The disaster is unlikely to make any significant dent in their economic growth projections.
Sri Lanka and Maldives, heavily reliant on tourism and clothing exports, need more help than others as the damage suffered relative to the size of their respective economies has been substantial.
"Indonesia needs assistance in kind like shipment of food, coordination rather than debt relief because the fiscal situation doesn't really warrant it," said Richard Segal, an analyst at emerging debt specialist Exotix.
Resource-rich Indonesia's budget deficit is just 1.4 percent of its GDP, while India expects to hold its deficit at about 4.4 percent for the year to end-March.
There are other mitigating factors. Asian economies are sitting on a pool of US$2.3 trillion of foreign currency reserves.
India's foreign exchange reserves are estimated at US$131.02 billion, Thailand's at US$49.1 billion and Indonesia's at US$36.32.
Rating agency Standard & Poor's said Indonesia had the resources to service its foreign borrowings.
"At this stage, Indonesia has the capability to service its domestic and foreign debt. The devastation of outlying provinces by the Indian Ocean tsunami did little to detract its debt-servicing ability," S&P said.
Australian Prime Minister John Howard said he was concerned that any move to forgive or freeze debt repayments would not help those most in need.
The ODI's Clay said history showed most disaster hit countries used more of their own resources than foreign money to rebuild economies.
"When you do look at disasters over a more extended period, typically the countries themselves pick up most of the costs," he said.
But Clay did note that debt relief could help nations save money for necessary relief and reconstruction activities.
Analysts said the proposed tsunami-related debt moratorium and the recent move by the Paris Club of sovereign creditors to cancel 80 percent of the debt Iraq owed to its members would spur demands for similar offers for other poor, indebted nations.
"What about all the African countries which are far more deserving than say Iraq and Indonesia," Segal said.
Oxfam said generous debt relief for the tsunami-hit countries should not come at the expense of the poorest countries that are expected to receive 100 percent debt relief later this year, nor should it be included as aid money.
"The sums that rich countries invest in global poverty reduction are shamefully small. At an average of US$80 per person per year in rich countries, the sum is equivalent to the price of a weekly cup of coffee," Oxfam said in a recent report.
The Sub-Saharan African nations, among the world's poorest, had a total external debt of about US$191.3 billion at the end of 2002, according to data from the Organization of Economic Cooperation and Development (OECD).
Britain, which assumed the presidency of the Group of Eight rich nations (G8), has said it is eager to tackle Africa's economic woes and wants its allies within the G8 to agree to multilateral debt relief, set a timetable for raising development aid to 0.7 percent of national income and sign up to a scheme to double Third World aid.
Barbara Stocking, director of Oxfam, said the crisis reinforces the need for the world to double aid spending, cut the debt of poorest nations and help them break out of poverty.
"This meeting is an opportunity for the G8 countries to show they have the ambition and drive to make this happen," she said.
Yesterday’s recall and referendum votes garnered mixed results for the Chinese Nationalist Party (KMT). All seven of the KMT lawmakers up for a recall survived the vote, and by a convincing margin of, on average, 35 percent agreeing versus 65 percent disagreeing. However, the referendum sponsored by the KMT and the Taiwan People’s Party (TPP) on restarting the operation of the Ma-anshan Nuclear Power Plant in Pingtung County failed. Despite three times more “yes” votes than “no,” voter turnout fell short of the threshold. The nation needs energy stability, especially with the complex international security situation and significant challenges regarding
Most countries are commemorating the 80th anniversary of the end of World War II with condemnations of militarism and imperialism, and commemoration of the global catastrophe wrought by the war. On the other hand, China is to hold a military parade. According to China’s state-run Xinhua news agency, Beijing is conducting the military parade in Tiananmen Square on Sept. 3 to “mark the 80th anniversary of the end of World War II and the victory of the Chinese People’s War of Resistance Against Japanese Aggression.” However, during World War II, the People’s Republic of China (PRC) had not yet been established. It
A recent critique of former British prime minister Boris Johnson’s speech in Taiwan (“Invite ‘will-bes,’ not has-beens,” by Sasha B. Chhabra, Aug. 12, page 8) seriously misinterpreted his remarks, twisting them to fit a preconceived narrative. As a Taiwanese who witnessed his political rise and fall firsthand while living in the UK and was present for his speech in Taipei, I have a unique vantage point from which to say I think the critiques of his visit deliberately misinterpreted his words. By dwelling on his personal controversies, they obscured the real substance of his message. A clarification is needed to
There is an old saying that if there is blood in the water, the sharks will come. In Taiwan’s case, that shark is China, circling, waiting for any sign of weakness to strike. Many thought the failed recall effort was that blood in the water, a signal for Beijing to press harder, but Taiwan’s democracy has just proven that China is mistaken. The recent recall campaign against 24 Chinese Nationalist Party (KMT) legislators, many with openly pro-Beijing leanings, failed at the ballot box. While the challenge targeted opposition lawmakers rather than President William Lai (賴清德) himself, it became an indirect
RSS