Make Poverty History

Introduction

Despite grand statements from world leaders, the debt crisis is far from over. Creditors have still not delivered on the promises they made seven years ago to cancel unpayable poor country debts. As a result, many countries still have to spend more on debt repayments than on meeting the needs of their people.

Rich countries and the institutions they control must act to cancel all the unpayable debt of the poorest countries. They should not do this by depriving poor countries of new aid, but by digging into their own pockets and providing new money. The task of calculating how much debt should be cancelled must no longer be left to creditors concerned mainly with minimising their own costs. Instead, we need a fair and transparent international process to make sure that human need takes priority over debt repayments.

International institutions like the IMF and World Bank must stop asking poor countries to jump through hoops in order to qualify for debt relief. Poor countries should no longer have to privatise basic services or liberalise their economies as a condition for getting the debt relief they so desperately need.

Take action to drop the debt with Jubilee Debt Campaign

Debt Relief Works!

In Benin, 54% of the money saved through debt relief has been spent on health including rural primary health care and HIV programmes.
In Tanzania, debt relief enabled the government to abolish primary school fees, leading to a 66% increase in attendance.
After Mozambique was granted debt relief, it was able to offer all children free immunisation.
In Uganda, debt relief led to 2.2 million people gaining access to clean water.

In More Detail

Debt cancellation is the unfinished business of the 20th century. At the Birmingham G8 in 1998, 70,000 campaigners surrounded the summit demanding an end to the debt crisis. Unprecedented numbers of protestors said they would no longer tolerate a situation whereby for every £1 given in aid, £3 was siphoned off in debt repayments.

This demonstration of public support led the UK government to cancel 100% of the debt owed directly to it by many of the world's poorest countries, and to put in funding to allow multilateral creditors to cancel some of their poor country debt. The UK has now gone even further and agreed to cover its share of the debt service paid to the World Bank and African Development Bank by some countries.

Despite these initiatives, in country after country governments are spending more on repaying debts than they are on health or education. Rich countries continue to pursue unjust claims on the budgets of poor nations, with devastating effects for the world's poor. In Malawi, for example, more is spent on servicing the country's debt than on health, despite nearly one in five Malawians being HIV positive. In Zambia, debt repayments to the IMF alone cost $25 million, more than the budget for education despite 40% of rural women being unable to read and write.

Nine years ago poor countries were made a promise. The Heavily Indebted Poor Countries (HIPC) Initiative was supposed to free the poorest countries from their crippling debt burdens, and ensure that no poor country was burdened with an unpayable debt. The reality has been very different:

Each year, Africa faces demands for over $10 billion in debt repayments.

Little more than 10% of the total debt owed by the world's poorest countries has been cancelled.

Although the HIPC Initiative was welcomed by debt campaigners, its scope is too narrow, its progress too slow and its priorities too dependent on the will of creditor nations. Calculations are made on the basis of what a country is considered able to pay, and not on what they need to combat poverty.

The United Kingdom has shown welcome political leadership in unilaterally canceling 100% of the debt owed directly to it by many of the world's poorest countries, and agreeing to cover its share of the debts they owe to the World Bank and African Development Bank. It must now push other countries to follow its lead, and use its influence to ensure that the debts of the poorest countries are cancelled in full.

Only 10% of the total debt owed by low-income countries has been cancelled. All unpayable debts must be cancelled if the benefits already felt by some countries are to be shared by all.

Zambia: The Cost of Debt

Zambia, formerly one of sub-Saharan Africa's wealthiest countries, is now one of its poorest and least developed. The living standards of Zambians are in free-fall and Zambia is now lower placed on the human development index (HDI) than in 1975.

With a life expectancy of just 33 years, Zambians die earlier than people anywhere else in the world. The Zambian Ministry of Health has said that it expects that half the population will die of AIDS, and roughly half the teachers trained every year die of the disease. 28 The Zambian government is crippled by the massive debt recalled by international financial institutions. Debt repayments are making it impossible to respond to the health, educational and economic challenges facing Zambians.

In 2004, Zambia used 7.35% of its Gross Domestic Product (GDP) ($377 million) repaying its debt. It spends twice as much repaying its debt as it does on education. Zambian students struggle to learn in classes containing 70 pupils on average. Zambia has endeavoured to meet the stringent conditions imposed by HIPC. At the behest of foreign governments it has privatised public utilities, removed subsidies, deregulated its markets and opened its doors to foreign imports. In spite of these efforts, by 2003 Zambia's debt had been reduced by only 5% of the levels promised under the HIPC initiative.

The failure to cancel Zambia's debt in full is having catastrophic consequences for poor Zambians. Current trends suggest not only that Zambia will be unable to meet most of the Millennium Development Goals (MDGs), but also that it gets further from them as time goes on.