Campaign warns that government plans to massage aid figures

UK government ministers are planning to use cancellation of a made-up debt to help meet their overseas aid target. Sudan currently 'owes' £678 million ($1bn) to the UK, and might qualify for debt cancellation in the next few years according to the Jubilee Debt Campaign.

The Department for International Development (DFID) have admitted in an email to Jubilee Debt Campaign that any debt cancellation for Sudan would contribute to meeting the UK government's aid targets. Jubilee Debt Campaign calculate that this theoretical money could account for as much as 7% of the aid budget.

The debt cancellation would cost the UK government nothing and will not make any more money available to Sudan. No repayments have been made by Sudan since the country defaulted on its debt in 1984. Yet the UK government is charging very high interest rates of 10-12% per year, increasing the original debt from £173 million to the current theoretical £678 million.

The money is owed to UK Export Finance (formerly ECGD), a unit of Vince Cable's Department for Business. UK Export Finance backed commercial loans to Sudan during the Cold War to buy British exports. The department say that they do not know what exports the original loans in the 1970s and 1980s were for.

Tim Jones, Senior Policy Officer at the Jubilee Debt Campaign, said: "Any debt cancellation for Sudan is not aid. The debt comes from loans to win business for Britain in the Cold War. Most of the debt is made-up money based on ridiculously high interest rates. The debt should be cancelled because it is unjust and unpayable, not used to meet targets and massage figures.

"Vince Cable needs to come clean and audit all the debt claimed by UK Export Finance, to find out who loans really did and did not benefit."

Sudanese debt to the UK currently stands at £678m ($1bn), and is growing at £20 million a year. Sudan is expected to enter the international debt relief scheme in the next two years. If, for example, Sudan's debt were cancelled in 2014, it would stand at £740m, totalling 7% of the aid budget.

Sudan owes Western governments $12 billion in total. Other countries are charging similarly high interest rates as the UK. If all western countries plan in the same way as the UK to use any debt cancellation to meet aid targets, this could knock $12 billion off aid spending in one year; around 12% of official aid.

Jubilee Debt Campaign is the UK coalition campaigning for cancellation of unjust and unpayable poor country debt.

Sudan's debt to the UK stands at £678m. See: www.publications.parliament.uk/pa/cm201011/cmhansrd/cm111109/text/111109w0003.htm

Sudan defaulted on its debt in 1984, when it was £173m. See: www.theyworkforyou.com/wrans/?id=2011-01-17d.33213.h&s=date%3A20110117+column%3A619+section%3Awrans#g33213.r0

The UK government says it does not know what it lent money for which led to the original debt being created. See:
www.theyworkforyou.com/wrans/?id=2011-01-17d.33178.h and www.theyworkforyou.com/wrans/?id=2011-03-16a.45330.h

Source: Jubilee Debt Campaign