SUNS  4326 Wednesday 18 November 1998


Development: UNDP for debt relief for hurricane-hit Nations



United Nations, Nov 16 (IPS/Thalif Deen) -- The U.N. Development Programme (UNDP) Monday urged Western donors to provide urgently-needed debt relief to hurricane-devastated Central America and France, Britain and Denmark led an international effort to help Nicaragua, Honduras, Guatemala and El Salvador.

UNDP Administrator James Gustave Speth praised France for forgiving some $70 million dollars in debt owed by Nicaragua and about $29.4 million owed by Honduras. The two Central American countries have accumulated long-term debts estimated at four billion dollars and six billion dollars respectively.

"Every dollar forgiven by France is a dollar potentially liberated from national budgets for investment in the reconstruction of these countries," Speth said. "As governments struggle to shelter, feed
and reconnect their people with essential services, they don't need the ball and chain of debt dragging behind them," he added.

Since Denmark was not owed any debt by Nicaragua, the Danish government took the unusual step of providing some $11 million so that the Nicaraguan government could settle its multilateral debts to the Inter-American Development Bank. "This is not a cancellation of debt to Denmark, but a payment to resolve Nicaragua's multilateral debt problem," Poul Nielson, the Danish Minister for
Development Cooperation, told IPS.

Nielson said the Danish government had decided to provide debt-relief to Nicaragua even before Hurricane Mitch left a trail of death and destruction early this month. But after the devastation, he said, Denmark decided to increase its support: from a projected eight million dollars to 11 million dollars.

Britain, a third Western donor nation, also has agreed in principle to provide debt relief to the hurricane affected nations.

Speth said the countries hit by Hurricane Mitch had some of the world's lowest incomes and highest debt burdens. "Even as they dig out from the rivers of mud that have engulfed their communities,
daily interest on loans held by Nicaragua and Honduras is accruing at a rate of 2.2 million dollars a day," he noted.

Urging donor nations to also address the long-term needs of the Central American region, Speth said "it is obvious from our preliminary assessments, that there are no quick fixes here."

"We have to help these countries back onto the path of long term development, swiftly and in ways that benefit the poorest communities - the people who have borne the brunt of this tragedy,"
he added.

According to preliminary estimates, the hurricane is believed to have killed some 11,000 people and left another 13,000 missing - feared dead. About one-fifth of the region's 1998-1999 harvest also
may have been lost.

U.N. Secretary-General Kofi Annan last week requested the World Bank and other international financial institutions to give urgent attention to the medium-term rehabilitation needs of the region and asked UNDP and the Office for the Coordination of Humanitarian Affairs to facilitate cooperation among them to achieve this.

Suggested areas of cooperation include soft loans and the redirection of existing loans to rebuild damaged infrastructure. A meeting of all major U.N. agencies and multilateral financial institutions is scheduled to take place in New York later this week.

The U.N. Environment Programme (UNEP) and UNDP announced a joint environmental recovery and rehabilitation programme for the hard hit countries. The proposed programme is being developed on a request from environment ministers from Latin America and the Caribbean.

The two U.N. organisations will prepare an assessment of environmental damage; a short term emergency strategy and financial package for addressing environmental health problems; an
environmental master plan focusing on land use management, early warning systems and preparedness for environmental emergencies; and more efficient energy technologies.

Meanwhile Oxfam American, a humanitarian relief organisation, called on the US government to "show real leadership on emergency assistance, debt relief and long term reconstruction aid" for
Central American nations.

"The United States should follow the lead of France and Britain in declaring support for short-term debt relief for Nicaragua and Honduras," Oxfam America said.

"There is no doubt a Marshall Plan for Central America is necessary," Oxfam America President Raymond Offenheiser said. "Hesitation on the part of the Clinton Administration is just added
hardship to our friends in Honduras, El Salvador, Nicaragua and Guatemala."

Oxfam America called for a bipartisan agreement with US Congressional leaders to increase substantial support for Central American relief beyond the $80 million now pledged.

Current projections of the economic damage caused by the hurricane run into billions of dollars. "The U.S. response is not yet commensurate with the scale of losses suffered in the region," he
added.