Debt relief is core to a holistic development policy, which involves giving poor democracies a space to decide the course of their own development.
Norwegian Church Aid holds the view that the debt relief offered to the poorest countries has fallen short, because it is too modest and offered to too few countries. Norway must actively promote the extension of the debt relief schemes offered to the poorest countries, and seek to achieve debt relief for middle-income countries as well.
Political freedom of action
It is most important that debt relief does not take place at the cost of funds already committed to development purposes. Norwegian Church Aid takes the view that new loans should not be given on conditions that overrule national democratic systems and serve to exacerbate poverty.
Debt relief should not be used to pressure poor countries to liberalize their trade or to commercialize basic public services. Apart from requirements for good governance and a strategy for poverty relief, developed through an open and participatory national process, debt relief should be unconditional.
Illegitimate debt and responsible lending
Illegitimate debts and debts incurred by dictators are the result of loans granted by creditors to openly non-democratic regimes and for illegitimate purposes. Large loans have been granted to regimes with no democratic legitimacy. Despite these funds having been used to oppress the population, that same population is now forced to repay these loans.
In addition, creditors have been held responsible only to a minor extent for their lending to illegitimate regimes. Illegitimate debts are about the connection between international finance policies and the responsibility of the international community to uphold human rights and justice. Norwegian Church Aid believes that banks, donor countries and international finance institutions must also be held accountable for their greed and irresponsible behaviour.
We also believe that it is essential to establish international standards for responsible lending, to avoid poor countries incurring new illegitimate and unpayable debt burdens.
Democratization of the international finance institutions
Today, the World Bank and the International Monetary Fund (IMF) assume a dominant position in many countries. In some countries, their position is so dominant that they undermine the opportunity of these countries to formulate national priorities and their own policies.
The World Bank and the IMF are institutions with a huge democratic deficit. Norwegian Church Aid believes that increased co-determination is a precondition for allowing the developing countries to participate in the formulation of the frameworks for their own development. In addition, the credibility of the World Bank and the IMF will depend crucially on greater inclusion of the developing countries in key decision-making processes.
Norwegian Church Aid is of the view that Norway should contribute to strengthening the position of the poorest countries within the international finance institutions, and strive to achieve more openness in their governance structures.
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