G8 Africa Debt Pardon Meaningless

With the G8 summit interrupted, the new round of debt forgiveness for Highly Indebted Poor Countries (HIPC) will be momentarily put off ... not that it matters. It turns out the debt was forgiven long ago:

For more than two decades, a system of “defensive lending” has miraculously matched the dates and amounts of repayment and interest schedules to disbursements under “new” loans to create a perpetual rollover of defaulted debt obligations....

Only a name separates rotating defaulted loans in perpetuity from the finality of debt cancellation. No real resources have been transferred out of the poorest debtor economies to the multilaterals because the debt has not been effectively repaid. Year by year, every poor country outflow has been offset by a predictable and assured balancing inflow. The path of fresh lending has followed precisely the pattern of debt payments.

The HIPC debt burden is phantom and imposes no demands on impoverished economies. For the last 20 years, each and every HIPC nation, regardless of corruption, waste and failure to comply with conditions, has benefited from an annual net inflow of official funds. For borrowers, the outcome is the same, whether old loans are cancelled or fictitious new loans are extended to provision old loan payment schedules. But governments of poor countries have been quick to capitalize on the artificial HIPC link of debt relief to poverty reduction with its promise of more funds.

More at A Constrained Vision, h/t to her mom, Betsy

So all of Bono's harping about how debt repayment perpetuates the cycle of poverty and precludes nice African dictators from taking care of their peoples' health and education is hogwash. It's just a perpetual cycle that feeds the despots, harms the people and makes the rich countries feel like they're doing something noble.

Cut it all off! It's the only path of hope for Africa.