Hope of debt relief helping poor fades

By Traci Carl

SAN JUAN, Honduras (AP): Very little government aid ever makes it up the washed-out dirt road to this mountain village, and people here have learned not to expect much.

Politicians sometimes arrive, striding from shack to shack with promises of a better school or a large delivery of food. But nothing usually comes of it. Even the rocky soil, which barely yields corn and beans, is more giving.

For two years, anti-globalization protesters have harried the International Monetary Fund and World Bank demanding they cut debts owed by poor countries like Honduras, to try to help poor communities like San Juan.

The world bodies have responded by forgiving US$20 billion in debt from 23 nations -- two-thirds of what they owe -- in return for promises to fight poverty. Nine more countries are targeted, and total relief could jump to $30 billion.

But even anti-debt groups are skeptical the billions of dollars in debt aid, including Honduras' $556 million, will ever benefit the poor.

"The money that's supposed to arrive, won't. I don't believe it's real," said Mauricio Diaz of the Social Forum for External Debt and Development in Honduras, an anti-poverty group that fought to cut Honduras' debt.

To qualify for the Heavily Indebted Poor Countries initiative -- known as HIPIC -- countries must show they can't afford interest payments and come up with a plan for reducing poverty. But there are few, if any, safeguards against misuse of funds -- a huge temptation in poor nations with histories of corruption.

IMF and U.S. officials say donor countries will continue to check a country's progress as they review whether to lend more money or grant more aid. The United States and six other wealthy nations are covering a third of the program's cost.

"We are supportive of the HIPIC program," said Tony Fratto, a spokesman for the U.S. Treasury Department, which has forgiven $3.7 billion in debts, all taxpayer funded. "It is still in the early stages, and we would like to see how it works."

Debt-relief groups are skeptical that countries that don't help the poor will be punished.

"Elites in poor countries do deals with elites in rich countries, and you get a lot of poor agreements as a result," said Ann Pettifor of Jubilee Plus, a London-based group. "There's no incentive not to lend recklessly."

U.S. and IMF officials argue the debt program is more accountable than past ones, which weren't explicitly linked to poverty relief.

"In many cases, people hoped that the money would be spent well," said Masood Ahmed, the IMF official in charge of the debt- relief initiative. "I think it was difficult to tell because there wasn't the same effort in trying to track the debt relief."

Pettifor has seen isolated success stories. Uganda, which received $660 million in debt relief, has doubled primary school enrollment, while Mozambique has vaccinated 500,000 children with its $254 million in debt savings.

But Honduras' glossy, 117-page poverty reduction program book doesn't mention specific targets for spending. Instead, it talks generally about poverty in Honduras, identifies regions that could get aid and says local leaders will decide where help will go.

Miriam Velasquez, a Honduras government spokeswoman, said the participation of nonprofit groups, as well as commissions set up to monitor progress, will help reduce corruption and fraud. But Diaz says his and other nonprofit groups weren't included in drawing up Honduras' plan.

San Juan could use the help. The village of 120 families, about 150 miles (240 kilometers) northeast of Tegucigalpa, the nation's capital, has a high rate of tuberculosis. Dozens of children are infected with a virus, transmitted by an insect, that could cause death if left untreated.

But the people of this pine-covered mountain have grown to rely on nonprofit organizations.

American volunteers have taught residents how to build cinderblock and tin-roofed homes to replace adobe and thatched roof structures where the deadly insect resides.

The volunteers do arts and crafts with the children in the makeshift, one-room school overlooking the village, and help the kindergarten teacher try to find out why he hasn't been paid by the government in months.

When aid does arrive, it is usually during an election year -- in return for the town's vote. But residents don't want handouts. They'd rather have agricultural training to help feed their families year round. The scrubby, high-altitude soil barely grows enough corn and beans for everyone.

"We don't want little political propaganda presents," said Carlos Gonzalez, as residents joined with volunteers to dig up dirt to make cinderblocks for building homes. "They don't benefit the future."