Odious Debt- Can it be a solution to Ghana's economic woes?
What is odious debt? The simple definition is: “Don’t owe, won’t pay.” It is said that an academic lawyer named Alexander Sack developed the concept of `odious debt` at the beginning of the 20th Century. In referring to the national debt of a country he wrote: "If a despotic power incurs a debt not for the needs or in the interest of the State, but to strengthen its despotic regime, this debt is odious for the population of all the State. This debt is not an obligation for the nation." Sacks work provided the legal rationale for action taken at the beginning of the 20th Century by the USA in relation to Cuba. In the aftermath of the Spanish-American war the USA took over the administration of Cuba from Spain. Spain looked to the USA to repay the debt owed to it by Cuba. The US Government refused to repay debts they considered to have been "created by the Government of Spain, for its own purpose and through its own agents, in whose creation Cuba had no voice". The debt, as far as the US Government was concerned had been used to suppress the democratic will of the people of Cuba. It was therefore an unjust debt and as such should not be repaid. Does it sound familiar? Perhaps General Afrifa had it right when he refused to repay the national debt, which he believed to have been incurred by the CPP and Nkrumah. His mantra was:“ Yen tua oo, yen tua.” The doctrine of odious debt between the USA and the Spain was no less different from the odious debt between Rawlings and the NDC and the people of Ghana. Indeed the situation was very similar if not the same from 1979 till 1992. Rawlings and the NDC seized power from a democratically elected government. And for the next 12 years (not including his 8 years as the President) they borrowed loftily from the World Bank and the donor institutions and spent the money lavishly to further their own political ambitions while subjecting the people of Ghana to abject poverty and suppressing dissent. By the time Rawlings and NDC converted from military rule to civilian rule he and his party had burdened Ghana with external debt of about 6 billion dollars with no plan to repay it. Wasn’t that an odious debt? And why should Ghanaians be responsible for repaying this debt? At the time President Kufuor assumed office, Ghana’s external/ foreign debt stood at 6.4 billion dollars and its income per capita was about US$ 400 according to the World Bank and the IMF. Most of the debt was a carry over from Rawlings’s despotic regime. Sources from the World Bank admit that Ghana could seek relief under the doctrine of odious debt but sources also state that no African country has ever invoked the doctrine for fear of retributions from creditors. There was an outcry when the IMF demanded that Asia cut growth and consumption. The critics complained that the IMF conditions would hurt consumers, make for lower wages and penalize the poor more than the rich. Yet these are exactly the conditions that have been imposed on African countries including Ghana, which form the basis for debt relief under the so-called Highly Indebted Poor Country (HIPC) initiative. Britain has joined the other industrialized countries in accepting that IMF and World Bank policies are correct for the poor countries. Thus Britain pushes for more generous debt relief, but only within the IMF framework, which hurts the poorest-exactly, those they want to help! The IMF/World Bank structural adjustment and stabilization policies to which debt relief is tied have not helped Ghana. Today Ghana remains heavily dependent on international financial and technical assistance. So why did President Kufuor chose to join the HIPC instead of seeking debt relief under the doctrine of odious debt for at least the first 12 years of Rawlings’s terror? Opposing views are welcomed. Views expressed by the author(s) do not necessarily reflect those of GhanaHomePage.
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