Canceling debt is inadequate aid

Canceling debt is inadequate aid

With an official aid package of A$1 billion for Indonesia on the table, and an extraordinary popular push to support tsunami victims, nobody should call Australia mean. But because the Howard Government is at odds with most members of the Paris Club of creditor nations, which support debt relief, the allegation may well be made at their meeting.

But for all its easy attractions, abolishing debt is not an effective alternative to other forms of assistance. Debt relief is a boon to national treasuries, with no guarantee that the money freed up will meet the people in greatest need.

It punishes poor countries that have prudently managed to pay back what they have borrowed. And it creates a dangerous precedent. If debt relief is adopted for any of the nations harmed by the tsunamis, specious reasons will be found for why the same concessions should be granted to other countries.

The best international assistance is that which reaches the people who are poorest, and that is rarely the officials who find their ministerial coffers swell when debts are forgiven. -- The Australian, Sydney