via Norway urges widespread audit of development loans | Public Finance International By Mark Smulian | 20 August 2013
An audit of debts owed by developing countries to Norway should inspire other countries to examine poor past lending decisions, the country’s international development minister has said.
A Deloitte team looked at 34 of Norway’s loan contracts with Egypt, Indonesia, Burma, Pakistan, Somalia, Sudan and Zimbabwe, finding that four violated United Nations principles on responsible lending.
The four projects highlighted were Deloitte were: a wave power plant in Indonesia where there were concerns about its technical and commercial viability; serious design faults in a vessel subject to guarantee in Myanmar; allegations of weapon and drug dealing by a Pakistani buyer having been published before a guarantee was issued; and a Zimbabwean state-owned buyer being the subject to widespread allegations of corruption several years before the guarantees were issued.
Deloitte said it had not found evidence to suggest that the Norwegian companies were involved in any allegations of corruption.
Norway’s international development minister Heikki Eidsvoll Holmås said the audit had prompted a review of unmanageable debt burdens, among the fundamental causes of poverty in developing countries.‘Although the solvency of many countries, such as Brazil, is improving, the debt burden is hampering development in some poor countries,’ Holmås said.
‘These countries are having difficulty servicing old debt agreements made on unfavourable terms. We now want to address this.’
Holmås said Norway had over the last eight years cancelled foreign country debt equivalent to €910m.
‘I urge other countries to follow suit,’ he added.