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A moratorium on the debt owed by developing countries is being considered following the tsunami in southern Asia. Interview with Brian Hammond, a development expert at the OECD. He explains that it is a good thing that a moratorium on debt is being envisaged as part of the aid to victims of the tsunami, and comments on the situation of each country.
Nathalie GEORGES: So, cancellation, moratorium, debt relief or the status quo, what is the best solution for these countries? Each case is different, and that is why some countries do not want any help with their debt. Let us hear the opinion of Brian Hammond, an expert with the Organisation for Economic Co-ordination and Development. Suzanna Dorhage spoke with him in Paris.
Brian HAMMOND, OECD development expert: It is a very good thing that a moratorium on debt is being envisaged as part of the aid to victims of the tsunami. The most pressing needs are for water, food and shelter for those affected. But some countries, such as India and Thailand, are refusing this moratorium. They want to remain credible debtors so as to be able to continue to borrow money on international markets. Indonesia’s external debt is enormous, and Sri Lanka is an extremely poor country. In these two cases, postponing debt repayment will be highly beneficial. The other side of the coin is that, unlike humanitarian aid, which is directly assigned to the construction of schools and hospitals, it is more difficult to check whether governments really allocate the funds resulting from debt postponement to those in greatest need. This is particularly difficult to monitor in countries prey to internal conflict, such as Sri Lanka and Indonesia.
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