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UNDP administrator calls for debt relief and priority focus on the needs of the poorest victims

INTERNATIONAL COMMUNITY URGED TO ADDRESS LONGER- TERM DEVELOPMENT NEEDS IN CENTRAL AMERICA
New York 13 November 1998 - Applauding relief efforts now underway in Central America, the Administrator of the United Nations Development Programme, James Gustave Speth, however today urged donor countries to address the longer-term needs of the region as well.

"The United Nations development community is in this for the long haul and emergency relief, however generous, will not be sufficient to put these nations or their people back on their feet," he said. "It is obvious from our preliminary assessments that there are no quick fixes here. We have to help these countries back onto the path of long term development, swiftly and in ways that benefit the poorest communities - the people who have born the brunt of this tragedy."

Mr. Speth said that significant resources will be needed to make an early transition from relief to development. "People can't be expected to live under canvas indefinitely, without safe water supplies, health care or sources of energy. They need help to rebuild their lives and better futures for their children. Endemic poverty was a major contributing factor to the enormous death toll still rising in Central America. We must not forget this."

Mr. Speth said that reconstruction in the region should be informed by the painful experience of Hurricane Mitch. "It is not just a matter of putting back what has been lost," he said. "These countries must rebuild in ways that are more sustainable, in areas that are less vulnerable to natural disasters, with materials and technologies that better meet the needs of poor communities, and with planning that factors in the risks from natural phenomena peculiar to this part of the world."

Mr. Speth urged the international community to explore all the financial avenues available to support reconstruction in the region and he applauded those countries that have already moved to ease the debt burden of hurricane-affected countries.

"As governments struggle to shelter, feed and reconnect their people with essential services they don't need the ball and chain of debt dragging behind them," he said. "Honduras and Nicaragua face massive reconstruction with accumulated long-term debts of US$4 billion and $6.1 billion respectively. These were impossible burdens even before the hurricane washed away their crops and infrastructure. In a good year, the interest due on Nicaragua's debt is equal to 29 per cent of its annual export income."

Mr. Speth praised the announcement this week that France would forgive $69.8 million it was owed by Nicaragua and $29.4 million owed by Honduras. "France has set an important example not only for major industrial nations but also for neighbouring countries in the region. One-third of the Honduran debt is bilateral ($1.4 billion) and half of that is owed to neighbours in Latin America. More than half of Nicaragua's debt is also bilateral ($3.1 billion) and Latin American countries hold about 25 per cent of those claims."

Mr. Speth said that the countries hit by Hurricane Mitch had some of the lowest incomes and highest debt burdens in the world. "Even as they dig out from the rivers of mud that have engulfed their communities, daily interest on the loans held by Nicaragua and Honduras is accruing at a rate of $2.2 million a day. Every dollar forgiven by France this week is a dollar potentially liberated from national budgets for investment in the reconstruction of these countries."

"Thousands of people have perished and hundreds of thousands are homeless, and it is essential to restore the infrastructure to sustain broken communities immediately," he said. "It's largely a question of international commitment. It is important to remember that in the devastation, suffering and extreme dislocation of Central America today, all that went before has not been lost. The education, the skills - the human capacity of the region - remain with the survivors, together with their determination to rebuild their lives. The question is how best to support them."

United Nations Secretary-General Kofi Annan has requested the World Bank and other international financial institutions to give urgent attention to the medium-term rehabilitation needs of the region and has asked UNDP and the Office for the Coordination of Humanitarian Affairs to facilitate cooperation among them to achieve this. Suggested areas of cooperation include soft loans and the redirection of existing loans to rebuild damaged infrastructure.

For additional information please contact Pedro Cote in New York at (212) 906 5427