Summary Geography A Level: Economic transition: Impact of debt relief programmes in Uganda and Zambia
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Course
Economic transition
Institution
CIE
These Geography A-Level notes examine the impact of debt relief programs in Uganda and Zambia, analysing how these initiatives have affected economic growth, poverty reduction, and social development. The notes provide a detailed exploration of the successes and challenges faced by both countries. ...
Impact of debt relief programmes in Uganda
Countries have been borrowing for as long as countries have existed, in the case of most of the
developing countries in this world the current borrowing really began in the 1970s. This was a time
when commodity prices were high and were expected to remain high for a very long time.
Unfortunately, commodity prices didn't stay high world interest rates increased in the 80s and that
made it impossible for these countries to service their debt. During the 1970s and the 1980s the
whole organic economy was right under state control at the same time the country was rappelling
with the oil price crisis of the 70s. The country accessed lending from wherever it was available at
the time by the time we arrived at the late eighties we had accumulated 2.1 billion dollars of external
debt which made it virtually impossible for basic investment in social services. This was because
almost all of the revenue at the time was going to serve his debt this meant they had no recourse but
to approach our peril of creditors to seek relief.
Uganda became the first country to participate in the Heavily Indebted Poor Countries (HIPC) scheme
in the year 2000. Uganda was to become the flagship for economic development and good
governance. However, Uganda actually experienced little benefit with the debt burden only
marginally decreasing. Although when the Multilateral Debt Relief Initiative came in in 2006 debt
was massively reduced. Debt went down from $4.5 billion in 2005 to $1.1 billion in 2007.
Impact of debt relief programmes in Zambia
The highly indebted poor countries scheme is supposed to reduce a country’s debt to a sustainable
level. Some activists have argued that projections used to calculate Zambia’s threshold are wrong
and thus debt servicing will continue to be a problem in Zambia. The HIPC scheme would
considerably reduce Zambia’s debt and thus free resources allow for money to be spent elsewhere.
Currently Zambia is projected to be in major debt until 2010. It is argued that after 20 years of
involvement with the HIPC and MDRI these financial institutions, it should be clear that their polices
have not benefited Zambia. Although economic reformers have argued that the fault has been with
the implementation of policy by successive Zambian governments.
According to official government figures, Zambia’s External debt is pegged at US $6.5 billion.
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