Rich nations debt plan gets Swiss support

Development aid is needed to fight global poverty Keystone

Switzerland has reaffirmed its support for a plan by the Group of Eight leading industrialised nations to write off the debt owed by the world’s poorest countries.

Swiss officials also confirmed that Switzerland would increase its spending on development aid, but non-governmental organisations say they are not satisfied

“Switzerland […] welcomes in principle the recently announced intention of the G8 to cancel the multilateral debt of heavily indebted poor countries,” said Serge Chappatte at a United Nations meeting in New York on Tuesday.

The deputy director of the Swiss Agency for Development and Cooperation (SDC) added that Switzerland did have some reservations about how the G8 plan would be implemented.

“A number of questions including the practical modalities, as well as the financing of the initiative, remain however to be clarified,” he admitted. “Switzerland is prepared to take an active part in the search for appropriate solutions to these remaining issues.”

The G8 plan, which was agreed in London this month, should be officially adopted by the group at its annual summit in Scotland on July 6-8.

Under the deal, the World Bank, International Monetary Fund and the African Development Bank would cancel the $40 billion (SFr 51.4 billion) debt owed by 18 countries – most of them in Africa.

Debt relief

Twenty other countries could also benefit from debt relief worth a total of $15 billion on the condition they fulfil criteria such as good governance, democracy, fighting corruption and budgetary discipline.

Chappatte said that the Swiss authorities were closely monitoring talks on new resources to fight poverty, but still had serious reservations about global mechanisms and facilities.

“We are willing to examine a participation in more limited mechanisms on a voluntary basis, such as the recently proposed financing facility in favour of immunisation,” he added.

Chappatte also reaffirmed Switzerland’s commitment to increasing official development aid (ODA), but warned that it had to be used more efficiently.

“Significant results in this regard will only be achieved, if very substantial additional efforts are made by all partners concerned, in particular by donor and recipient governments, as well as multilateral institutions,” he said.

The deputy director of the SDC added that Switzerland would reach it ODA target of 0.41 per cent of gross domestic product (GDP), a goal set at the UN’s Monterrey development conference in 2002.

Development aid

Swiss officials are expected to announce the target – an increase of 0.04 per cent over current levels of development aid – has been reached in September.

Non-governmental organisations have however denounced the increase as nothing more than slick accounting. The heightened ODA is the result of adding costs linked to asylum procedures to the overall total.

The NGOs said that government should follow the recent example of the European Union and the United Nations, which suggest ODA should reach 0.7 per cent of GDP by 2015.

Chappatte admitted that the government recognises the need for additional development spending, but added that it was taking steps in the right direction.

“ODA will be among the very few budget items growing over the next few years,” he said. “Recognizing fully the need to increase our contribution […] the Swiss government is firmly committed to review the situation as soon as possible in order to establish a new target for the period beyond 2008.”

swissinfo with agencies

Key facts

Switzerland pledged in 2002 to increase official development aid from 0.37% of its GDP to 0.41%.
In 2003, GDP was equivalent to SFr433.36 billion.

In brief

The G8 debt relief plan should be adopted at the Gleneagles summit in Scotland in July.

Eighteen countries, including 14 from Africa, which owe nearly $40 billion, should see their slate wiped clean by the IMF, the World Bank and the African Development Bank.

Twenty other countries could benefit from a similar measure worth another $15 billion.

Switzerland’s contribution to the plan would be worth at least SFr25 million per year for a decade.