Debt for food
Although I know that Debt Swap Schemes are not new at all, and although creditor countries have managed to get the Debt issue outside the limelight of financing mechanisms (arguing they are old claims and thus not entitled to be called “innovative”) we cannot deny their current heavy burden in developing countries´ national budgets and, conversely, their potential to free a considerable amount of resources to be better allocated for social investments.
Some years ago, we supervised a research in the Hunger-Free Latin America and the Caribbean Initiative on how to redirect debt swap schemes towards food security programmes, as a means to get more resources, easily mobilised and better targeted. The research was done jointly with UN ECLAC and the full report and executive summary can be downloaded in the following address (in Spanish). http://www.rlc.fao.org/proyectoiniciativa/librocda.htm
Debt services in Latin America is 3 times higher that public investment in health and nutrition, and five times higher that investment in agriculture and rural development. Therefore, the repayment of debt services (mostly interests) prevents the government from assigning higher budget allocations to high impact social investments. For instance, Ecuador and El Salvador assigned during the period 2008-2009 more money to debt services payment than to social investments.
Several debt swap schemes have been proposed, mostly addressing environmental protection and health-related activities, although the issue has been overshadowed in recent years, as other yet-to-be-approved mechanisms are catching policy and media attention. It is worth noting that most of the previous debt swap initiatives have never tackled the most pressing problems of the poorest and hungriest households.
The Latin American countries with the highest prevalence of undernourishment held a
bilateral public debt of 12.300 million USD in with OECD countries in 2006. Bilateral debt cancellation schemes of 20% could provide more than 2500 million USD for food security programmes. In any case, a big chunk of these bilateral debts would never be cashed, as those are long-term debts coming from many years ago. These scheme, although not innovative in itself, has never been proposed for anti-hunger programmes, and it would provide additional (but not fresh) funds in an age of financial constraints.
Best regards
José Luis Vivero Pol
Anti-hunger and Social Rights Activist
PhD candidate in Food Governance (Université Catholique de Louvain)
PhD candidate in Food Governance (Université Catholique de Louvain)
Jose Luis Vivero Pol