LEGAL COMMITTEE Burundi’s Position on the Legal Aspects of Odious Debt Introduction Burundi, one of the world’s smallest nations, has just emerged from a 12-year ethnic-based civil war. The war started in 1993 and just ended in 2005, which then caused an alteration in the government political system to take on a democratic form. They are now in process of peace although they are still in the struggle of reviving their shattered economy and forging national unity. Burundi is a landlocked island surrounded by the Democratic republic of Congo, Rwanda, and Tanzania.
Burundi’s GDP per capita is about $139, and only 18% of the population has food security. Due to its poor economy, Burundi is at this moment burdened by huge debts and is struggling to pay those debts and revive their economic condition. Burundi’s Stance on the Legitimacy of Odious Debt Odious debts are debts that are contracted by the government for purposes that are against the interest of the citizens of the state. Despite the fact that Burundi has a very poor economy, we are not very sure that odious debt has been or is being implemented in our country.
Burundi deals with many economic problems, which then leads to many other problems such as low education and lack of medical supplies. These issues have led Burundi into various debts. Burundi has paid off some of their debts with the help of the International Monetary Fund (IMF). Currently, we are still struggling to pay off our debts and revive our economy. Burundi’s Experiences and Circumstances in Debts and Odious Debts Burundi has received much help from the IMF (International Monetary Fund), World Bank, and many other institutions. Creditors have helped us a great deal by reducing our debts.
Burundi became the 24th country to reach final stage of the IMF debt relief program. Burundi has also been categorized as one of the “heavily indebted poor countries” and received additional debt relief from the Multilateral Debt Relief Initiative. The IMF and World Bank have been helping Burundi by cancelling more than 90% of Burundi’s debts, worth around $1. 4 billion. That debt relief meant that for over the next 10 years, Burundi may save up to $50 million a year by focusing their spending on priority areas such as health, education, agriculture, water, and rural infrastructure.
Burundi’s main creditor nations have agreed to reduce Burundi’s debts by 7%, after negotiations with the government of Burundi and after Burundi implemented structural reforms. The agreement has provided Burundi with US$80 million and canceled US$ 4. 4 million of Burundi’s foreign debt. Before this agreement, Burundi’s debt to creditors had reached the amount of US$130 million. Burundi’s Cases in Debts The poor economic condition of Burundi is a major issue that Burundi is struggling to work out. Currently, economic and financial crises are affecting the world, in both developed and developing countries.
Although they can survive, debt and poor economies are the impacts and felt by every country affected. The crisis also hindered developing countries to become more developed. As a developing country, this crisis has made Burundi vulnerable. We are experiencing lower exports, reduced aid in-flows, decreased remittance, and decreased foreign direct investment. The crisis also caused a weak economic balance of payments. There are some external debts of Burundi that are repayable. In 2003, their debt reached $1. 140. 000. 000 and was ranked 132.
However, over the next six years until 2009, the number kept increasing until $1. 200. 000. 000 and was ranked 150. These are the total of public and private debts owed to nonresidents repayable in foreign currency, goods, and services. This information is accurate approximately until September 17, 2009. However, Burundi has made much progress, especially its economy. Burundi’s Domestic Legislation Concerning Debts In the 1980s, it became apparent that irresponsible lending had led many developing countries into a debt trap they couldn’t climb out of.
As a result, 1,400 scheduled loans built up, making them irresponsible to their people because of enormous repayment schedules. To resolve this problem many organizations were formed to help developing countries that are in huge non-payable debt situations through debt cancellation. Through this program, many of Burundi’s debts have been cancelled. Other countries have also done these debts cancellations. This program has helped many countries in financial problems and made it more possible for them to keep building their country and developing. External Debts of Burundi Debt is a major issue in Burundi.
External debts are owed from other countries and now we are struggling to pay our debts, although we are already helped through the debt cancellation program that had cut our debts immensely. In 2003, Burundi’s external debts reached the number $1. 140. 000. 000 and kept increasing until over the next 6 years. In 2009, the amount of Burundi’s external debts was $1. 200. 000. 000. These are the total of public and private debts owed to nonresidents repayable in foreign currency, goods, and services. Burundi is heavily dependent on bilateral and multilateral aid, with external debt totaling US$1. billion in 2004. The International Monetary Fund (IMF) was suspended during the outbreak of violence in 1993. Then, the IMF reengaged with Burundi in 2002 and again in 2003 with post-conflict credits. In 2004, IMF approved $104 million of loan for Poverty Reduction and Growth Facility. Purposed Actions and Solutions Burundi is in a huge amount of debt and struggling to pay their debts and revive their economic condition. Many organizations, such as IMF and the World Bank and many countries have helped Burundi by relieving a certain amount of their debts.
The IMF has relieved 90% of Burundi’s debt and that’s worth over US$1. 4 million which means Burundi may save up to $50 million a year for 10 years. The money is spent in priority areas such as health, education, agriculture, water, and rural infrastructure. In health, more resources will be devoted to building health centers in rural areas and free health care for children under five years old and women at the time of childbirth. In education, increased funds will be dedicated to building schools, recruiting teachers, and providing school materials.
As in agriculture, more funds will be dedicated to improving food security, providing potable water, and other rural infrastructure needs. Because of the debt relief, Burundi is now poised to make progress toward better living and reducing the rate of poverty. Thus, debt relief plays an important role in supporting the authorities’ efforts to reach the objectives in their Poverty Reduction Strategy. Conclusion Burundi realizes that the struggle that we are facing is challenging and harsh. However, with great effort and consistency, Burundi will overcome the issues that it is currently facing.
Corruption has dominated all sectors of Burundi’s politics, economy and other sectors. Thus, Burundi needs to eliminate corruption so it will be fully implemented and increase the welfare of the people. In the end, if corruption is eliminated and the distribution of wealth is spread equally, Burundi will no longer be needing any loans. Works Cited -Advancing the Odious Debt Doctrine- www. cisdl. org -Burundi: Country Financing Parameters -Response to the Liberal Democrats International Development Consultation Paper – Jubilee Debt Campaign Burundi: Joint Bank-Fund Debt Sustainability Analysis -Debt Relief Works: The Impacts of Debt Cancellation in Africa and Latin America -Jubilee USA Network – Creditors reduce Burundi’s debt by 67%-Afrol News – We offer debt collection services in Burundi- RPS Worldwide – Diagram of Burundi’s External Debts- CIA World Fact Book – Debt Reliefs by IMF – http://www. imf. org/external/pubs/ft/survey/so/2009/car020509a. htm – General Data of Burundi- http://www. state. gov/r/pa/ei/bgn/2821. htm – Burundi’s Suggestions on Debt Reliefs – http://www. mnadvocates. org/4Jun20046. html