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.
An average British person spends about 30 pounds a month on clothes. It doesn't seem a lot, but you multiply it by the number of British residents (60.27 million) and you get 1.8 billion. 4 months of spending on clothes can eradicate the whole of Africa's debt.
www.makepovertyhistory.co.uk
