Getting Africa Out of Debt

Congressional action to relieve African nations of a portion of the debt they owe the United States is now almost completed, bringing modest but urgently needed relief to 14 nations south of the Sahara. For a country such as Kenya, this means a saving of $6 million a year in debt service alone. It is a useful beginning.

President Bush had proposed the program on the eve of last July’s Economic Summit in Paris, following the constructive example of French President Francois Mitterrand. Under terms approved by Congress, outstanding development assistance loans and their debt service costs, amounting to $861 million, are being forgiven. The help is limited by law to the nations whose structural adjustment programs meet the economic reform criteria set by the World Bank and the International Monetary Fund.

The development assistance loans comprise less than one-fifth of what the sub-Sahara African nations owe the United States, however. The African debt to Washington totals $4.8 billion. The United States has been working with other creditor nations through the so-called Paris Club to restructure debt payments, but the American response has not yet matched the generosity of the French. It should.

Sub-Sahara Africa’s debt is less than 30% the debt of Latin American nations. Unlike the nations of Latin America, African countries owe the majority of their debt to governments rather than commercial banks. While the totals are more modest than in Latin America, with roughly equivalent populations, the debt impact has also been crushing.

The poorest African nations combined have an indebtedness greater that the sum of their gross national products and five times their export earnings. Clearly, they need more help if there is to be rescue from ruinous economic decline.