Debt Cancellation Urgently Needed in Face of Global Financial Crisis

Today Africa Action calls on the
International Monetary Fund and the World Bank to cancel the 300
billion dollars of illegitimate debt owed by African nations. In the
face of shocking and grim statistics on the impact of the economic
crisis in Africa, it's more important now than ever that President
Obama and his economic team act to stop the global economic meltdown
and protect the poor.

"Shrinking markets combined with the credit crunch means that
governments will have less money to spend on important sectors such as
education, health, and women's empowerment, as economic survival
becomes their number one goal," said Gerald LeMelle, Executive
Director of Africa Action.

Africa is facing a severe economic crisis that has already had serious
ramifications on future growth. Prices of commodities have fallen
sharply. Remittances, credit, and foreign aid have all decreased, and
food crises and fuel shortages have been reported throughout many
countries. The global financial crisis is threatening to wipe out
economic gains made by African countries in the past few decades, with
millions of Africans being pushed below the poverty line.

An international response has been coordinated through the G-20 and the
IMF. The G-20, an informal forum of a group of finance ministers and
central bank governors from industrialized nations, is working to
promote global economic stability to deal with the financial crisis. It
is proposing a "Global New Deal" that would involve between $500
billion and $1 trillion in new lending to Global South countries from
institutions such as the IMF and the World Bank. However, they have not
removed the harmful conditions that will be required for any loans
borrowed.

"The situation will be exacerbated through these new loans by the
IMF. The loans still carry conditions that have the potential to
subvert economic growth, and urgent action is needed more than ever to
see that all debt is canceled to Africa as it faces this current
financial crisis," said Michael Stulman, Associate Director for
Policy and Communications at Africa Action. "Focusing on lending
cannot help these countries survive the economic crisis. A stimulus
package should include grants and money without the detrimental
conditions we've seen in the past."

So far President Obama has focused on drastically increasing funding
for the IMF. Urgent action is needed by President Obama to push the
G-20 to focus on canceling existing debts and eliminating harmful
conditions upon which loans are granted to Global South countries.
This is a proven effective way to reduce poverty. Conditional lending
will further increase African debt to astronomical figures that will
leave many African nations in desperate circumstances.

For more information and all the latest analysis on debt and
international financial institutions, please visit www.africaaction.org/