Wednesday, October 14, 2009

Debt forgiveness for what???

In spite of Bono, Jeffrey Sachs and the late Pope John Paul II plea for Jubilee's and debt forgiveness to the most poverty stricken nations in the world -Honduras is one of those Highly Indebted Poor Countries or HIPC in World Bank parlance nations-  unless there is a completely radical transformation of the whole nation and the state to get rid of old habits, I see debt forgiveness as a counterproductive effort in the long run.

Politicos and other decision makers respond to incentives as anybody else. If the old structures are still in power when debt forgiveness comes along, then these folks get a free ride to maintain their power structure and to get us into the hole once again. There are no incentives though in this process to ensure that the "liberated" funds will actually reach the poorest of the poor or to promote economic growth and equity. In essence, what debt forgiveness does is to perpetuate corruption, inefficiency, mis-management and thus condemn us to not rely on our own capacity for building-up our nation.

In many ways it may be even better to let the country collapse to the point where these complete transformations are needed, rather than have this cosmetic changes that don't change anything at all. I am afraid this is starting to happen right now in Honduras. A report by the Institute of Social Studies in the Hague, one of the premier institutes of higher learning in the world related to socio-economics, has given an initial glimpse that strategy redudction funds were not being used by the Zelaya government for poverty reduction strategies, rather to satisfy campaign promises.

In fact, our experience with the deposed government by Manuel Zelaya Rosales, only serves to show how this hypothesis is true, as funds from the "Poverty Reduction Strategy" were misspent in order to pay for current account debts including paying salaries to teachers and other unionized workers in Honduras. Other funds are simply gone, probably to accounts in the Cayman Islands or Bahamas, and to finance the lifestyles of Stetsons, Harley Davidsons and purebred horses that our deposed president was accustomed to living. Maybe even to finance more of Mr. Zelaya's rides in the military F-5 jets over the skies in Tegucigalpa or his scuba diving excursions and certification under the disguise of "promoting tourism" Ahhh... what a life of the "Champion of the Poor".
It is not too late though to make the changes needed and to put back in track this opportunity to lift the whole country from the stasis its stuck right now. One needs only the national will to do it...

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