Debt

David Gwemani monitors the effects of IMF-designed Structural Adjustment Programmes in Zambia [Gideon Mendel]

Debt cancellation needs to go further – 100% should mean 100% for all governments and institutions, more poor countries should get debts cancelled, and debt relief should not be tied to economic conditions

Poor countries were offered loans by rich countries' banks and governments during the 1970s.

When interest rates soared in the 1980s, debts grew, and countries had to pay with money that should have been used for healthcare and education.

Lenders also attached damaging conditions to debt relief, such as forcing cuts in public spending and demanding that key services be privatised.

Financing debt relief

The Heavily Indebted Poor Countries initiative (HIPC) launched in 1996, and was expanded following the 1999 G8 Summit with pledges of $100 billion.

A further $50 billion was pledged at the Gleneagles G8 summit in 2005, and many creditors (including all G7 countries) agreed to cancel most debt owed by the HIPC countries, and other low-income countries as well.

G7 finance ministers have now agreed to the principle of total debt cancellation of multilateral debts - those owed to the World Bank, IMF and African Development Bank - by an initial set of poor countries, but not yet all.

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