Cancellation of foreign debt demanded

Members of the civil society have demanded cancellation of foreign debt fully.The demand was made at a press conference organised by Campaign for Good Governance, a non-government organisation, at Dhaka Reporters' Unity on Wednesday, on the eve of the Group 8 (G-8) summit to be held in Hokkaido of Japan. The three-day summit will begin from July 7.They said Bangladesh deserves full debt cancellation as debt sustainability is an essential condition for macroeconomic stability and sustained economic growth. Moreover, it is undeniable that Bangladesh cannot afford to pay on average US 1,070 million dollars a year to foreign creditors. Of this, the country pays out about US 870 million dollars in servicing external debts to the so-called development partners, they said.With increasing food deficit and expenditure on living standard, the number of poor people is on the rise rapidly. As a result, it is becoming hard for Bangladesh to achieve the millennium development goals (MGD), they said.During the period from January to March last, net income of the poor decreased by 36.70 percent due to inflation because of price rise of essential commodities and 8.50 percent more people have been added to the population under poverty line.Calling upon the international community including the Group 8 countries to exempt Bangladesh from paying millions of debt servicing, they said, Bangladesh needs US 7.50 billion dollars a year to finance the implementation of the MDGs. If debt sustainability is based on the financing needs for the MDGs, Bangladesh would receive full debt cancellation.They said, Bangladesh is classified as a low-income country and home to the third highest absolute number of poor people in the world, after China and India. Despite the huge amounts it spends in servicing debt (US 1,457 million dollars in 2006), the World Bank describes it neither as 'severely' nor even 'moderately' indebted, but instead classifies Bangladesh as 'less indebted'.Instead of rewarding Bangladesh for it track record of prompt debt servicing, the WB has interpreted this to mean that Bangladesh's debt must be sustainable.