World Bank Refuses to Cancel Debts
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New Vision (Kampala)
March 25, 2005
Posted to the web March 25, 2005
Mary Karugaba
Kampala
A proposal by MPs to write off 100% of Uganda's debt has been rejected by the World Bank.
Anders Agerskov, the World Bank's senior policy officer, told Members of Parliament on the finance committee that an 100% debt relief is difficult because of costs of the write-off like loss of interest rates on the loans and paying the source of the loan.
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Agerskov said, "If we write off this debt, you will miss the opportunity of getting more money under the Highly-Indebted Poor Countries' Initiative, where countries access five times more money than those which are not."
He said the World Bank and international donors were discussing the issue.
Agerskov was responding to MPs' concern that despite partial debt relief by the WB, Uganda's debt has continued to soar and reached unsustainable levels.
The MPs were meeting World Bank officials to discuss the benefits of the bank's debt relief and whether the money should be channeled into productive areas like education, infrastructure, electricity and other poverty eradication programmes.
Committee chairman Bright Rwamirama said the World Bank should involve Parliament in all the stages of negotiating for the loans.
The MPs said there was poor monitoring of the loans by the World Bank, leading to corruption.
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Agerskov said, "Corruption is still hard to fight because when you ask what happened to the money, nobody knows, yet the report said 10% of the money reached the people."
The MPs said although the World Bank had waived some debts, other donors had not.
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