Cancellation of debts incurred as a
result of the Norwegian Ship Export Campaign (1976-80)
Norway’s claims vis-à-vis
developing countries amount to approximately NOK 4,4 billion.
Approximately NOK 2.9 billion of
the debt owed by developing countries to Norway (including accrued
interest on arrears) is related to the Norwegian Ship Export
Campaign (1976-80), under which Norway exported 156 vessels and
ship’s equipment totaling NOK 3.7 billion to 21 countries.
The campaign was financed through
the Norwegian Guarantee Institute for Export Credits’ (GIEK) old
general guarantee scheme and its old special scheme for developing
countries. A great many of these projects proved to be economically
unsustainable, so that government guarantees were triggered and the
Norwegian Government became creditor.
In 1988-89, the Brundtland
Government conducted an evaluation of the Ship Export Campaign, in
which the campaign was criticized for inadequate needs analyses and
risk assessments. The main conclusion was that this kind of
campaign should not be repeated.
A little more than NOK 1.1 billion
of this debt has been cancelled previously, primarily in connection
with Norway’s follow-up to the debt relief initiative for the
poorest countries
(Heavily Indebted Poor Countries, HIPC).
It is now generally agreed that the
Ship Export Campaign was a development policy failure. As creditor,
Norway shares part of the responsibility for the resulting debts.
By canceling these claims, Norway takes the responsibility for
allowing Ecuador, Egypt, Jamaica, Peru and Sierra Leone no longer
to be obliged to service the remainder of these debts.
As of 30 June 2006, the remaining
ship export debt is shared by:
Myanmar | NOK 1 579 million | Sierra Leone | NOK 60 million |
Sudan | NOK 772 million | Peru | NOK 48 million |
Ecuador | NOK 225 million | Jamaica | NOK 19 million |
Egypt | NOK 168 million | | |
In the case of Myanmar, Sudan,
Ecuador and Sierra Leone, all the debt owed to Norway is ship
export debt (99 per cent in the case of Sudan). For Egypt and
Jamaica the ship export debt represents 75 per cent of the total
debt to Norway. For Peru the ship export debt represents 18 per
cent of the total bilateral debt.
In 2007, the Government plans to
cancel the remaining debt incurred by Egypt, Ecuador, Peru, Jamaica
and Sierra Leone as a result of the Ship Export Campaign by means
of a unilateral declaration, without stipulating any
conditions.
In the case of Myanmar and Sudan,
the ship export debt will not be cancelled until these countries
become eligible for multilateral debt relief operations.
Sierra Leone is expected to
complete its HIPC treatment around the turn of the year 2006/2007,
and in any case all of its outstanding debt to Norway will thereby
be cancelled. Therefore, Sierra Leone’s debt will not be cancelled
until the country has completed its HIPC treatment.
As of 30 June 2006, the total
outstanding debt owed to Norway by Ecuador, Egypt, Jamaica, Peru
and Sierra Leone was NOK 520 million (NOK 460 million if Sierra
Leone is excluded). Cancellation of these debts will result in a
reduction in future payments from the countries concerned and a
corresponding reduction in income over the government budget. Based
on current exchange rates and interest rate levels, it is
calculated that the government’s revenue losses will amount to NOK
577 million over the rest of the ship export debt repayment period,
which expires in 2021.
In keeping with the financing
facility of the
Plan of Action on Debt Relief for Development the Government proposes to cancel the ship export debt without
allocating any funds over the development assistance budget and
without reporting the amounts forgiven to the OECD/DAC as official
development assistance (ODA).
Nor will the cancellation of the
ship export debt be covered by the financing facility (which allows
for the cancellation of NOK 3 173 million without budgetary
allocation), except in the case of Sierra Leone.
The unilateral cancellation of the
ship export debt will be implemented outside the cooperative
framework of the Paris Club of creditor countries. In this
particular case the Government finds that there is good reason for
Norway to take an independent stand.
The unilateral forgiveness of debt
in 2007 will be a one-off debt relief policy measure. All future
debt forgiveness will be effected through multilaterally
coordinated debt relief operations.
Royal Norwegian Ministry of Foreign Affairs
2 October 2006
