ECA Watch: International NGO Campaign on Export Credit Agencies Export Credit Agencies: A Ball and Chain for People and the Environment
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NGOs condemn “false” aid statistics linked to export credit debt deals

Press Release

Brussels, September 14th – Some 57 non-governmental organizations world wide released today a statement challenging world leaders at the UN World Summit on their efforts to finance the Millennium Development Goals. The statement charges that “many governments are falsely inflating their aid figures by including risky commercial debt write-offs”. It urges leaders “to change the way they report aid statistics so that their citizens get a true picture”.

The 57 civil society organizations from 24 countries call on creditor governments to acknowledge that export credit support to domestic corporations does not serve development objectives as defined by ODA. The statement calls for such debt cancellations to be removed from their reports of progress towards the agreed United Nations targets.

Export credit agency (ECA) debt is the result of Northern government guarantees to their exporters for deals in developing countries. These deals frequently serve no poverty reduction purposes and the money has often disappeared or been diverted. Yet the cancellation of ECA debts is usually paid for out of official aid budgets. The Organization for Economic Cooperation and Development (OECD), a group of rich countries, defines the rules of Official Development Assistance (ODA) expenditure reporting and allows creditor countries to report debt cancellation related to commercial export credits. In August an OECD official conceded that it is highly arguable whether ECA debt cancellation should be reported as ODA. However only a few countries such as Norway report their debt cancellation separately.

The problem will worsen in 2006 since Iraq’s cancellation will add virtually US$20 billion to the phony aid statistics. “The widespread malpractice of aid dilution blatantly misleads the public", stated Francesco Oddone of the European Network on Debt and Development (Eurodad), a Brussels-based NGO. “The fact is that most donors are at present 'cheating their way through' toward the agreed United Nations aid target by including cancellations of defaulted commercial debt. Such cancellations are supposed to be done additionally to aid flows”.

To establish the responsibilities of creditors and debtors transparently and democratically, they must establish audits to publicly report on the origins of export credit debts and immediately write off all export credit debts that originate from export credit support to deals with undemocratic regimes. "Ill conceived projects that end in disaster should not be called foreign aid", said Bob Thomson, facilitator of ECA-Watch, the multi-country export credit campaign which initiated the statement with Eurodad.

Contacts:
Francesco Oddone or Alex Wilks, Eurodad, foddone@eurodad.org
Tel: 00 32 2 543-9066 : Mob: 00 39 33 565-55267

Editors’ notes
· In France, almost one-third of official development aid is devoted to debt cancellation of which almost half has been ring-fenced for the cancellation of export credit debt.
· In the Netherlands, 10 per cent of the official aid budget is reserved for export credit debt cancellation out of the official aid budget.
· Export Credit Agencies (ECA) are institutions by which Northern governments subsidize their companies abroad. These agencies insure, on behalf of the State, private sector investments in ‘risky’ developing countries. In of default or non-payment by the state, the Northern exporter is reimbursed by the ECA, which tries to recover the money from the host country. Further information is on www.ecawatch.org
· Over 30% of the total external official debt of developing countries is ECA debt

CIVIL SOCIETY STATEMENT ON EXPORT CREDIT AGENCY DEBT

At the Monterrey and Millennium summits governments worldwide pledged to achieve a series of important poverty-related goals by 2015. Among other important measures, the industrialized world promised to increase aid flows to enable increased social investments by those countries that are struggling to guarantee a future to their citizens.

While it is encouraging that a number of governments have announced increased aid levels in recent years, we are very concerned that many governments are falsely inflating their aid figures by including debt write-offs. Export credit debts alone increase the real amount of their stated aid total of many countries by as much as one quarter.

This misleads the public, which assumes all promised aid is spent on meeting the needs of poor people. It also contradicts the agreements signed by governments at Monterrey and elsewhere which state that debt relief does not detract from aid (ODA). Furthermore, it needs to be noted that export credits are provided to support corporations in developed countries, and never qualify as development aid.

Rich country governments must improve the way they report aid statistics so that their citizens get a true picture and can hold them accountable.

The undersigned 57 civil society organizations from 24 countries demand urgent action by governments to:

a) Acknowledge that ECA support to domestic corporations does not serve development objectives as defined by ODA;
b) Exclude cancellation of export credit debt from ODA, thereby removing these amounts from their reports of progress towards the agreed United Nations target of 0.7% ODA/GDP;
c) Establish regular audits to ascertain and publicly report on the origins of export credits debts;
d) Cancel, as in the case of Iraq, all export credit debts that originate from export credit support to deals with undemocratic regimes.

The full statement and NGO signatory list can be seen on www.eurodad.org

 

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