Source:
Jubilee Debt Campaign
This report is intended as a wake-up call to anyone who thinks the developing world debt crisis has been resolved. Debt relief to date has not only cancelled too little debt for too few countries, but has made very little attempt to implement the sort of structural reform which would end the rule of global finance. May, 2009 (pdf format)
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BACKGROUND
In the last two decades, the external debt has been a huge problem that third world countries have to face. The amount of developing countries external debt in 2004 was 2.5 millions of millions of dollars, this amount represents 34 per cent of the Third World Gross National Product (GNP). Taking into account that in 1968 the Third World debt represented nearly 50 thousand millions dollars, the amount has increased by 50 times.
The World Bank and the International Monetary Fund are the two main loaners. These institutions that were initially created to help poor countries are now being used as a tool by developed countries to increase their power. The sister institutions: the Asian Development Bank, the African Development Bank and the Inter-American Development Bank were created in order to promote development, but their policies have so far failed to achieve these goals.
For low-income countries (defined by the World Bank as those with a GNP per capita below US$785), multilateral debt increased by 544% between 1980 and 1997, from US$24 billion to US$155 billion, and currently represents 33% of their total long-term debt burden (versus 25% in 1980).
As a consequence of this crushing debt-service burden, national governments have virtually no bargaining power when negotiating policy lending. The Structural Adjustment Programs (SAPs) of the World Bank and IMF, created originally to “reduce poverty”, are being replaced by a new approach called Poverty Reduction Strategy Papers (PRSPs). But both are similar instruments that regulate development of poor countries by imposing conditionalities.
The Washington Consensus legitimated and created institutions for the implementation of neo-liberal policies, like privatisation, deregulation, liberalisation of markets, and great reductions in social expenditures. SAPs themselves, by orienting economies towards generating foreign exchange, are designed to ensure that debtor countries continue to pay their debt, further enriching Northern creditors at the expense of domestic programs in the South.
This situation has generated since 1980s a “spiral of poverty” where once inside it, is very difficult for developing countries to get out. The national resources that should be oriented to effective social investment and to improve people’s living conditions are now needed to be destined to payments of debt interest.
Thus, this international debt problem has become such a crisis that many poor countries pay more money to the World Bank and the IMF each year than they receive in loans. The World Bank's own figures indicate that the IMF extracted a net US$1 billion from Africa in 1997 and 1998 more than they loaned to the continent.
The problem has been greatly increased by the multilateral institutions’ conditionalities, since the IMF determines the creditworthiness of countries: i.e., until the IMF gives its stamp of approval (which usually requires adherence to the economic policies it recommends), poor countries generally cannot get credit or capital from other sources.
In the last few years, the World Bank and the IMF have agreed to help countries that are heavily suffering from major debt burdens by creating the Heavily Indebted Poor Countries (HIPC) Initiative of 1996. But to qualify for HIPC, a country must complete three years under an IMF-designed Structural Adjustment Program. Even after that hurdle, the country must fulfil a further three years bound by another SAP before relief is granted on its multilateral debt. The cruel paradox here is that the SAP requires them to cut spending on health care, food subsidies, and education.
Many critics and borrowers have stated that these policy conditions often lead to negative environmental, social and economic impacts - disproportionately harming people living in poverty – and provide few tangible benefits in exchange for large increases in debt. In addition to the well-known consequences such as the increase in public indebtedness, negligible or negative growth, and socio-environmental degradation, these measures reassert a dependency of borrowing countries on ‘creditors’.
As a consequence of this situation, civil society organisations seeking solutions to the debt problem propose alternatives ranging from the sole acknowledgement of legitimate debts to the non-payment or condonation of debts. Several campaigns around the world seek to create awareness in poor countries of how unfair this situation is and to call the attention of national governments and IFIs.
Source: Rede Brasil, World Revolution and International Debt Observatory
The Inter-American Development Bank was established in 1959 by Latin America and the Caribbean countries. Today, the IDB is the main source of multilateral financing in this region.
The African Development Bank (ADB) is a regional multilateral development finance institution established in 1964 and engaged in mobilising resources towards the economic and social progress of its continent.
In 1967, the Joint Commission mapped out the basic principles of the CAF, and on February 7, 1968 the governments of the member countries (Bolivia, Colombia, Ecuador, Peru and Venezuela) signed its Establishing Agreement in San Carlos Palace, Bogotá. The Corporation was conceived as a multipurpose bank and agency for promoting Andean development and integration.
The International Monetary Fund was originally established to maintain an orderly international monetary system where exchange rates were kept stable and where free trade could prosper. Countries experiencing short term Balance of Payments problems (where imports exceed exports) could borrow from the IMF, rather than devalue their currency. However, that role has changed. Since 1982, when Mexico came close to defaulting on its debt, the IMF has been providing loans to countries on the brink of bankruptcy. See In-deph report
The World Bank was intially established to re-build Europe after World War II. Today, it provides long term loans to developing countries. Traditionally the World Bank has funded large scale infrastructure projects, but it now also lends to the social sector. See In-deph report
In a historical context, the international struggle to obtain cancellation of the Third World countries' debt is fairly recent: it has existed for hardly more than 20 years. It finds itself amongst major international combats and strong campaigns like that for the abolition of slavery, for the eight hour day at the end of the 19th century, for universal suffrage, for sexual equality, among others, which have influenced and still influence the struggle endured by the oppressed to gain emancipation. January, 2007
Despite the commitments made by world leaders over the last ten years to tackle the debt crisis, the $88 billion of poor country debt that has so far been cancelled is not enough, the report finds. Unfinished Business: Ten years of dropping the debt is released on the tenth anniversary of the 70,000-strong human chain in Birmingham on 16 May 1998. It looks back at the seminal events of May 1998 and asks: just how far have we come? May, 2008
For decades, the debt issue has remained a front-runner—or perhaps even the front-runner—on the agendas of civil society organizations and movements throughout the world. The debt problem is a fascinating mosaic of world politics and power relations spiced with greed and mistrust. It also shows the devastating consequences of systemic imbalances in the global economy. From the civil society standpoint, these consequences have resulted in human suffering and diminished opportunities for those affected by debt. May, 2007
The current international community efforts to support development and poverty reduction in developing countries are based on the notion that the participation of these countries in the international economic system is deeply affected by a series of asymmetries and imbalances. Debt and trade policies are perceived to be a crucial part of this complex of policies. However, the close interdependence that exists between the asymmetries in the trade system and the chronic nature of the over indebtedness problem faced by developing countries oftentimes goes missing in policy initiatives. May, 2007
Poor countries around the world are crippled by the debts they have to pay to rich countries; the impact on women and girls is particularly brutal. Globally, women and girls are more likely to be poor and disadvantaged. They are routinely excluded from decision-making at all levels, and have almost no independent control over resources. Despite this systematic discrimination, societies worldwide depend on the skills, work and knowledge of women to weather poverty. March, 2007
While accepted rhetoric says that donors respond to nationally-owned development plans, the reality is that these plans have little impact on either policy outcomes or the volume of loans a country receives. Opaque assessments conducted by the World Bank - known as Country Policy and Institutional Assessments - do. Critics argue that the scorecard is a way to coerce borrowers into adopting the Bank's preferred model of economic development. November, 2004
Responding to stinging criticism from civil society and the Commission for Africa, the IMF and the Bank are under pressure for a fundamental rethinking of the use of conditionality. The results of a series of ongoing evaluations will be critical. April, 2005
The IMF has recently completed a 2004 -2005 review of its conditionality. Eurodad presents a critical analysis of the key findings of the review and where possible a summary of the IMF’s Board of Directors response to the review is also included. May, 2005
Oxfam considered that recent World Bank efforts to reform its conditionality practices have not gone far enough. Oxfam's main areas of concern are: the administrative burden of World Bank conditions is still excessive; country 'ownership' is still not respected in practice; and independent assessments of the poverty impact of reform proposals need to be strengthened.(pdf format) July, 2005
EURODAD calls for radical reform of World Bank conditionality in light of rising conditions and failure by the Bank to respect country ownership. This NGO believes that the World Bank must radically improve the way it designs and applies its conditions in order to make aid more effective in reducing poverty. Recent reforms by the World Bank on conditionality, including the new operational policy on Development lending, which calls for ‘critical’ conditions only, greater transparency and more participation in setting conditions, do not go nearly far enough and are not being properly implemented. July, 2005
Weaknesses were unveiled regarding the cancellation of obligations undertaken with the IMF and the World Bank, approved some weeks ago by the Group of the world’s Eight richest countries in favour of a group of noticeably underdeveloped nations, among them Bolivia. Debt relief is conditioned on the implementation of neoliberal-type structural reforms, which imply increased indebtedness. July, 2005
Conditionality in IMF-supported programs has traditionally relied predominantly on quantitative targets for macroeconomic variables deemed crucial for the restoration of a country’s external viability. Virtually all IMF-supported programs include quantitative targets on the fiscal deficit and/or public debt, the expansion of domestic credit, and the accumulation of international reserves. The additional use of structural conditionality (SC),involving changes in policy processes, legislation, and institutional reforms is a more recent development. The objective of this evaluation is to examine the rationality of SC to derive operational recommendations for the future use of SC in IMF-supported programs. July, 2005
The now former Economy Minister of Ecuador, Rafael Correa, submitted his resignation after having carried out an economic policy not aligned with guidelines from multilateral credit institutions and having strongly criticized their requirements. This may probably explain how the story of the most popular Minister in President Palacio’s administration came to an end. August, 2005
World Bank conditionality is more important now, than ever before. This is because it is highly likely that a significant amount of the new aid that was agreed at the G8 summit will be delivered through the World Bank and as such, will be subject to its conditionality practices. Eurodad analizes the key findings and recommendations of the review and some suggested policy recommendations that NGOs should be calling for. August, 2005
In theory, the IMF could influence economic growth via several channels, among them advice to policy makers, money disbursed under its programs, and its conditionality. This paper tries to separate those effects empirically. Consistent with the results of previous studies, it is shown that IMF programs reduce growth rates when their endogeneity is accounted for. There is also evidence that compliance with conditionality mitigates this negative effect, while the overall impact, however, remains negative. IMF loans have no robust statistically significant impact. (pdf format) August, 2005
The new Framework aims to put debt at the center of the IFIs decision-making process. Nonetheless, the philosophy that informs the entire proposal does not come close to addressing the problem of long-term real sustainability from the perspective of creating conditions for low-income countries to attain the Millennium Development Goals. Eurodad’s briefing sets out what the new framework means for developing countries’ ability to meet the MDGs and achieve social justice for their peoples. September, 2005
CSO that are monitoring IFIs conditionalities organized during the WB-IMF Annual Meeting a seminar to examine in depth "What future for World Bank Conditionality". The Development Committee did agree to “regular monitoring to ensure consistent implementation at the country level [on conditionality] and for a report on progress next year.” October, 2005
This policy brief provides four case studies of the problematic policies that countries are required to implement in order to receive multilateral debt cancellation. Two of the countries examined by this study, Nicaragua and Zambia, have already implemented the required reforms to reach HIPC “completion point” and should therefore obtain debt cancellation under the G-8 debt deal in 2006. Their stories offer lessons for other countries. The other two, Cameroon and Malawi, have remained at “decision point” since 2000, and must undertake additional reforms to reach completion point in the HIPC Initiative. They are facing deadly delays. (pdf format) November, 2005
International policies on debt have so far failed to recognize the interdependent role that distorted trade agreements and chronic debt burdens share in perpetuating poverty. Structural adjustment and the HIPC initiative, with their one-sizefits-all approach to debt relief, relied heavily on wrong assumptions calling for tariff liberalization and promising export revenue increases. They have not only failed to substantially expand foreign exchange, but have also stranded many developing nations further in debt. (pdf format) December, 2005
The report reveals that impoverished countries still face an unacceptably high and rising number of conditions in order to gain access to World Bank and IMF development finance. On average poor countries face as many as 67 conditions per World Bank loan. June, 2006
All around the world, people are feeling the impact of the global economic crisis. The crisis threatens to re-ignite a debt crisis in the poorest nations: the IMF projects 31 low-income countries may be pushed into debt distress. The IMF has already increased its lending to developing (and some developed) countries in response to this crisis. As the crisis deepens, world leaders are expected to bestow an even greater role and additional funds on the IMF. Just over a year ago, the Fund was in a very different position. With long-time borrowers pre-paying and developing countries spurning the IMF’s advice, the IMF’s Board approved a plan to sell some of the Fund’s gold to finance its administrative budget. That proposal is still pending approval by the US Congress and other legislatures. April, 2009 (pdf format)
"The HIPC Initiative is a comprehensive approach to debt reduction for heavily indebted poor countries pursuing IMF- and World Bank-supported adjustment and reform programs." Official information available on the International Monetary Fund web site.
The international Jubilee campaigns have succeeded in alerting the world to the debt crisis plaguing impoverished countries. With the help of religious leaders, rock stars and millions of concerned citizens, the Jubilee campaigners pushed the World Bank and the International Monetary Fund (IMF), the lead agencies on debt and development, into introducing a debt relief plan,
and into adopting “enhancements” when its flaws became evident. Many expected these steps to provide a solution to the debt problem for impoverished nations. (pdf format) June, 2002
The IMF holds the largest official reserves of gold in the world after the United States
and Germany. The IMF has no real use for this gold and it is not used in the general day to day operations of the Fund. We recommend that these resources should be used for the cancellation of poor country multilateral debt. (pdf format) September, 2004
More than seven years into the Heavily Indebted Poor Country initiative, a durable exit from the debt crisis remains elusive. Even against the IMF and World Bank’s inadequate criteria, just seven countries have seen their debts reduced to sustainable levels, and 90% of low-income country debt remains on the books. Meanwhile, multilateral creditors are using the extra generosity of bilateral creditors to reduce their own contribution to HIPC debt relief. A new deal on debt relief is urgently needed, to address these shortcomings and deliver the additional resources necessary to accelerate progress towards the Millennium Development Goals. Gold is part of the solution, with the IMF sitting on reserves undervalued by at least $30bn. Revaluing this gold, and mobilising new donor finance, offer a way out of the current crisis. October 2004 (pdf version).
Will the HIPC debt relief initiative finally solve the debt burden that the Highly Indebted Poor Countries are facing since the 1980s? Is there any guarantee that a country’s external debt remains sustainable after the completion of the HIPC programme? This book presents a thorough analysis of the successes and failures of the HIPC Initiative and provides a wide range of suggestions of what needs to be done. Issues addressed include the bailing-out of IMF loans by donor countries, the (mis)use of aid funds for debt relief and repayment of export credits, the need for including domestic debt in assessments of debt sustainability, and the question of whether debt relief should be de-linked from IMF conditionality. With a view to the future of low-income countries, the book relates the HIPC Initiative to the Millennium Development Goals and warns that debt relief can only provide a fraction of the funds required for reducing poverty and avoiding a new build-up of unsustainable debt. The book spells out how genuine debt relief could contribute to poverty reduction and economic growth in poor developing countries. December 2004.
We did a lot of work in the lead-up to the April 15/16 meeting of G7 Finance Ministers, and the IMF/WB spring meetings that followed them, in the hope that they would result in real progress toward a deal on multilateral debt cancellation for a large groups of impoverished countries. They did not. In fact in many respects the meetings represented a step backwards. May, 2005
That the legitimacy of 100% debt cancellation is now widely accepted represents a dramatic reversal in the debt debate. Many have commented in recent years that the globalization movement has won the moral argument about trade and development, but that its positions have not translated into policy. May, 2005
The G8 communiqué goes along way to addressing the need for more and better aid. But, CSOs need to press for more detailed and improved pledges and timetables in the run up to the Millennium Summit in September. And, perhaps even more importantly, over the next few years, CSOs need to continue to hold governments to account for their commitments, especially when the issue is far from the public eye and media headlines. July, 2005
At their 6 - 8 July summit in Gleneagles Scotland, G8 leaders tasked the World Bank and the IMF with much of the follow-up on their commitments on debt reduction, increased aid and fairer trade. July, 2005
EURODAD afirms that G8 Heads of State must understand that the very limited actions they took last week only mean that the debt campaign will go on – as vigorously as ever before – and governments should be aware that NGOs will continue to watch them and continue to campaign hard for debt cancellation for all those countries of the south that need it – as a matter of urgency and as a matter of justice. July, 2005
At the beginning of July, the G8 nations set forth a precedent-setting “100 percent” debt relief plan for qualifying African and Latin American countries. However, the majority of Latin American debt is owed to parties not included in the plan. For debt relief to be successful, a new, more generous, more inclusive process must be implemented that allows a Latin American nation to prioritize its socioeconomic needs and dictate the tempo of its own development. July, 2005
This report reviews progress and issues in implementing the enhanced Heavily Indebted Poor Countries (HIPC) Initiative. In addition to that, it discusses the decline in the participation of commercial and non–Paris Club bilateral creditors to the Initiative as well as the preliminary list of countries that satisfy the indebtedness eligibility criterion under the extended HIPC “sunset clause.” (pdf format) August, 2005
As a result of unceasing pressure on the part of civil society campaigners, the World Bank and the IMF have finally endorsed the debt deal presented by the G7 Finance Ministers in June. This ratification, which took place at the WB/IMF Annual Meetings in Washington, brings to an end a long period of uncertainty about the implementation of the proposal. A number of points remain vague within the present agreement, and we must press for these to be clarified. September, 2005
As the World Bank and International Monetary Fund (IMF) annual meeting concluded in Washington, the final communiqué agreed that the debts owed by 18 of world's poorest countries to both institutions and to the African Development Bank will be cancelled, bringing an end to the suspense surrounding the issue for nearly three months. However, civil society organizations claim much more needs to be done to agree to full debt cancellation without conditions to other poor countries. September, 2005
Eric Toussaint's contribution to the International Conference "Resistances and Alternatives to the domination of the debt" focused in changes that have affected the debt of the third world between 1985 and 2005; the example of Argentina; unusual situation illustrates the impasse that the neoliberal model represents for people of the South, and questions for the activists and networks of the South and the North. October, 2005
Large amounts of foreign debt act as an albatross around the collective necks of many low and middle-income countries in the Global South. Funds that nations could be allocating to social expenditures such as education, health care, water, and sanitation are instead being diverted to repay foreign debt. The burden of high debt levels is also exacerbated at times by the intensity and intrusiveness of conditions attached to loans. Although the G-8 debt plan is a step in the right direction, efforts to relieve poor countries’ debt burdens remain insufficient. (pdf format) October, 2005
The IMF is planning to use the debt cancellation program to reassert its control over any countries that could begin to free themselves from the institution’s destructive influence. This is, of course, something we have been concerned about since the debt cancellation plan was first broached. December, 2005
Documents obtained from the IMF reveal how the Fund intends to implement its side of the G8 multilateral debt deal (now renamed the Multilateral Debt Relief Initiative by both the Bank and Fund (MDRI – a new acronym!). There are no real surprises contained within the set of documents. December, 2005
Organizations critical of the International Monetary Fund (IMF) and World Bank have uncovered plans by the IMF to make substantial changes to the debt cancellation plan announced with considerable fanfare at July's G8 Summit in Gleneagles, Scotland. Critics say that these changes will undermine the proposal and retract many of the promises made by the G8. December, 2005
In December 2005, the Executive Board of the International Monetary Fund (IMF) announced that it had approved immediate debt cancellation for 17 out of the 18 countries that had been promised cancellation at the G8 Summit in Gleneagles in July this year. Two further countries will also benefit from IMF debt cancellation: Cambodia and Tajikistan. January 2006.
This paper, produced by Eurodad in collaboration with Latindad, Fundación Jubileo Bolivia, Instituto de Estudios Nicaragüenses, Observatorio de la Deuda en la Globalización, CIDSE, “Sin Duda, Sin Deuda” and Fundación SES calls for the immediate cancellation of IDB debts owed by the Latin American HIPCs by the time of the IDB’s annual meetings between 3 and 5 April 2006. February, 2006
The cancellation of a large part of Nicaragua’s external debt (and that of 18 more countries), first carried out under the auspices of the HIPC Initiative and then under the most recent G-8 Initiative, has been expressly aimed at freeing resources that should be allocated to an ADDITIONAL increase in expenditure focused on poverty reduction, and particularly on education and health. However, when analyzing Nicaragua’s case it is worth wondering whether things will really go this way. February, 2006
Social organisations and some political leaders demand the Inter-American Development Bank (IDB) debt cancellation for the poorest Latin American countries. However, upon conclusion of the 47th IDB Annual Meeting, the issue remains pending. April, 2006
Too little debt relief was promised at Gleneagles and even less has been delivered. Only one third of the 60 countries most burdened by AIDS, debt and poverty will have some multilateral debts cancelled as of mid-2006. These write-offs will amount to just half of their total debts since monies owed to other creditors are not covered. This is considerably less than the "100 per cent" debt relief implied by the statements bandied about a year ago by G8 leaders. November, 2006 (pdf format)
Unfortunately, lasting effectiveness of the G8 initiative, just as previous debt reduction initiatives, is being compromised by large loopholes in the international economic system. These loopholes now may mean that hard won debt reduction, rather than opening development opportunities to debtor governments, ends up opening profit-making opportunities for other creditors. February, 2007
On 16 May 1998, 70,000 people from across Britain and the world took part in one of the biggest demonstrations the UK had ever seen: a human chain around the G8 summit in Birmingham, demanding an end to poor country debt. It was a day that changed the world for millions of people. Ten years later, as we look back at the seminal events of May 1998, just how far have we come? (May, 2008)
This Report examines ecological debt primarily from a South - North perspective, drawing from Acción Ecológica's definition of ecological debt. The report explores the origins of ecological debt and its relationship to financial debt, and presents some estimates of the size of the debt which the North owes the South. 2000
This investigation focuses on debt and oil, and exposes the very real relationship between them.debt. To do so, the authors have collected data on 161 countries for the period 1991-2002, and collected further data on 88 developing countries for the period 1970-2000 for use in a statistical model of debt burdens. (pdf format) May, 2005
A large amount of the financial debt has been used to accelerate the production beyond the inherent capacity of the resources. In several occasions, creditors in the North have injected capital to the South to serve their vested interests, continuing the range of exploitation and suppression. January, 2006
The recent announcement of Brazil’s upgrade to the net external creditor position was very welcome by the Brazilian Government’s financial authorities as a triumph of our economic policy. According to the government, for the first time and thanks to the high level of our international reserves, we have sufficient resources to pay off the external public and private debt if we wished to do so. That joy, however, is justified only from a strictly political perspective, since from a financial point of view the external debt is today a minor problem, compared to the internal debt, and the payment of both still represents an obstacle to progress on pressing social needs for the country. July, 2008(pdf format)
Indebtedness in developing countries presents a specific feature which has to be set at the heart of public debate: it results from an ongoing policy of deprivation and subordination of these countries by more industrialised countries, transnational corporations (TNCs) and international financial institutions, with the elites of the South aiding and abetting. Like other indebted countries in the third world, Ecuador faces an over-indebtedness. As a consequence, Ecuador is the Latin American country devoting the highest part of its budget to paying back its debt, which has an impact on public expenditure, notably health and education. August, 2007
This paper analyses some of the problems that arise when assessing the legal objections to debt repayment and evaluating whether and to what extent a debtor nation is in fact legally obliged to pay its foreign debt. Argentina is used as example, as it is not only a country in which debt repayment is at the forefront of the political and economic agenda, but it is more importantly the only country in which the courts have been involved in questions surrounding the validity and constitutionality of a country’s foreign debt. (pdf format) November, 2006
The debt issue is also very much on the agenda of the new Bolivian Government. The Government Ministries officials are all perfectly aware of some of the serious debt difficulties that continue to plague the country. Gail Hurley from the Eurodad Secretariat was in Bolivia working with Fundación Jubileo on debt-related issues and these are her reflections. (pdf format) August, 2006
The most relevant fact of late in regards to the Argentine External Debt is the restructuring of the bonds on which the Argentine government had stopped payment on December 23, 2001. This restructuring, sometimes presented as the “largest, most complex, and successful sovereign debt swap in history”, will continue in debate. Its importance must not allow us to forget the crucial meaning of the Deal: that it is a strategy to resume payment on a debt whose legitimacy, and even legality, have been questioned.(pdf format) March, 2005
In spite of all the pessimistic predictions, the Economy Minister Roberto Lavagna announced the end of Argentina's external debt swap. This announcement closes a three-year default period and opens up an interesting space for negotiation for Argentina, in spite of the pressure exerted by developed countries on the Argentinian government will continue to be on the table in future negotiations. April, 2005
Argentina successfully closed its debt swap and Brazil did not renew the agreement with the International Monetary Fund and is starting to walk alone. Both governments highlight the virtues of their policy strategies. However, not all opinions coincide when it comes to evaluations. April, 2005
This paper analyses in an excellent way some of the processes that led to the Argentinean debt default and its subsequent restructuring. Nowadays, this work is a useful contribution to understand the present of this country. June, 2005
Bolivia's civil society organisations united in the Platform of Action Against Poverty demand the unconditional debt relief to this country. Bolivia is a beneficiary of the debt cancelation promoted by G8 and approved by IMF and WB, but the conditions of this resolution make it insufficient. October, 2005
Upon setting 2006 budgets, Latin American governments have been allocating a significant part of resources to debt service payments. This effort, aimed at gradually diminishing the debt burden on the economy, is being made within a context of significant economic recovery. However, not only does this strategy compromise the distribution of resources towards other crucial areas for the development of these countries, but debt rates continue to be very high. Colombia, Venezuela, Panama, Mexico and El Salvador are some examples of that which is taking place in the region. November, 2005
The Lula administration has maintained the subordination and dependency of Brazil in relation to Multilateral Financial Institutions and their policies. In addition, the current government policies are focused on poverty reduction, taking as a strategy a development model which is incompatible with socioenvironmental sustainability. However, several social programmes within the Lula administration are granted external financing. This means that these social programmes are related to the conditions imposed by the MFIs. November, 2005
Bolivia is once again one of the world’s most heavily indebted countries. Adding to the chains of external debt are increasing levels of domestic debt slavery. New report by Fundación Jubileo Bolivia reveals the gravity of the country's public debt burden, despite partial debt relief. January, 2006
The balance between amounts granted and amounts paid turns out to be in favour of multilateral credit institutions in many Latin American countries. To maintain credit lines available could be a highly expensive resource for fragile economies. Ecuador and Paraguay are two countries facing a similar situation. January, 2006
The achievement of MDGs, in the case of Nicaragua – as in the case of many developing countries – is closely constrained by the relationship of the country with the IMF. In fact, in the case of less developed countries, it should be expected that IMF programs, which severely constrain the whole framework of economic and social policies, should also have as main purpose to contribute to the achievement of these Goals, which were unanimously adopted by Heads of State from all over the world. (pdf format) May, 2006
The external debt still remains a heavy burden on underdeveloped economies and its regional distribution has changed in recent years. Various factors have had an influence on the new trends that can be observed regarding the total external debt accumulated by regions, among which the following are included: the financial instability of emerging markets, the deteriorated socio-economic situation in Africa, and the appeal of regions such as Eastern Europe, the Middle East and Asia for foreign investment. April, 2007
Pakistan, India and Bangladesh are the major borrowers from International Financial institutions. These countries in South Asia contain over one-fifth of the humanity, consisting of 1.2 billion people. However, these South Asian countries spend less than five percent of its combined GNP on its people, due to which growing population has become a liability rather than a precious human resource. The gigantic problem of debt needs to be understood as a common issue and therefore, addressed unitedly by the people of South Asia. March, 2008
Information resources - International Institutions
The Economic Commission for Latin America (ECLAC) -the Spanish acronym is CEPAL- was established in 1948. ECLAC, which is headquartered in Santiago, Chile, is one of the five regional commissions of the United Nations. It was founded for the purposes of contributing to the economic development of Latin America, coordinating actions directed towards this end, and reinforcing economic relationships among the countries and with the other nations of the world. The promotion of the region's social development was later included among its primary objectives.
The G8 are rich countries including Italy, the USA, the UK, France, Germany, Japan, Canada and Russia. Without Russia the group are known as the G7. The G7 are the seven rich countries which make decisions on debt cancellation for the poorest countries.
The IFI Watchers Network connects organisations worldwide which are monitoring international financial institutions (IFIs) such as the World Bank, the IMF, and regional development banks.
The Bretton Woods Project works as a networker, information provider, media informant and watchdog to scrutinise and influence the World Bank and International Monetary Fund (IMF). It monitors projects, policy reforms and the overall management of the Bretton Woods institutions with special emphasis on environmental and social concerns.
Center for Economic Justice (CEJ) aims to strengthen international movements that counter corporate-driven globalization and promote more just policy alternatives. CEJ also links global South networks with U.S. community groups, activists, and policy advocates, with the goal of fostering and strengthening cooperation.
Eurodad is the European Network on Debt and Development. Eurodad is a network of 48 development non-governmental organisations from 15 European countries working for national economic and international financing policies that achieve poverty eradication and the empowerment of the poor.
Rede Brasil is a network of non-profit civil society organizations. It is non partisan and public oriented. Rede was established in 1995 and joins 64 member organizations that have the common goal of monitoring and intervening in issues that relate to international financial institutions.
The Freedom from Debt Coalition is a nationwide coalition of organizations and individuals to conduct advocacy work in the national, local and international arenas to realize a common framework and agenda for economic development.
The united front of creditors is now 50 years old. What were originally ad hoc mechanisms have solidified into a rigid negotiating framework which every southern debtor nation that is unable to meet its financial obligations to northern creditor governments is dependent on. The creditors don’t just control the process itself, they also create the framework within which a solution for the country in question has to be found. June, 2006
Despite high profile debt relief initiatives, the debt crisis continues unabated for most developing countries. With the international community at risk of failing to meet the 2015 MDG deadline, leaders in Doha should support a strong call for expanded debt cancellation to all countries that need relief to meet the MDGs. Moreover, they should address the fact that debt cancellation continues to be undermined by onerous forms of conditionality since countries must implement hundreds of conditions as part of the IMF/World Bank HIPC Initiative. March, 2008
Jeffrey Sachs and Thomas Friedman must be given some credit for embracing the idea of ending poverty and spreading prosperity, and for bringing these issues to wider public notice. Yet by basing their arguments on simplistic myths, they have hijacked the development
debate. CSO that have jumped on the Sachs/Friedman aid-and-trade bandwagon would do well to embrace the development alternatives that are being put forward by the alter-globalization
movement. If they do so, the goal of "ending poverty" may actually be achievable. January, 2007 (pdf format)
Despite its importance, consideration of foreign debt over the last few years has been diffuse and blurred. Whereas in the 1980s foreign debt was the focus of argument, twenty years later it appears as a marginal issue, as much in discussion of public policy on the development financing of alternatives to the current model as in critical theory. Despite that, the issue of debt in current circumstances may be perhaps even more strategically important than in the 1980s. September, 2006
According to most received wisdom, globalisation is not merely here to stay: it is good for everyone, whoever you may be, wherever you may live. However, "globalisation" is another name for late-twentieth/twenty-first century capitalism, qualitatively different from previous incarnations. When used in connexion with developing countries, globalisation is also synonymous with the various elements of the Washington Consensus. Mountains of evidence are available showing that "structurally adjusted" countries have been sufered its consequences. August, 2006
This report is intended as a wake-up call to anyone who thinks the developing world debt crisis has been resolved. Debt relief to date has not only cancelled too little debt for too few countries, but has made very little attempt to implement the sort of structural reform which would end the rule of global finance. May, 2009 (pdf format)
Analysis of public debt in developing countries has traditionally focused on external debt. However, in recent years several countries have looked increasingly to domestic sources when expanding their net borrowing or adopted aggressive policies aimed at retiring public external debt and substituting it with domestically issued debt. Some countries are even building up domestic fiscal liabilities with the objective of sterilizing enlarged aid inflows. This paper asks what possible challenges and opportunities might be arising from these new developments in sovereign debt management. (May, 2008)
The framework applied by the BWIs for assessing the sustainability of low-income countries’ external debt has been subject to an intense debate in the context of official debt initiatives in recent years. A critical assesses to this framework focuses on complementarities and trade-offs between fiscal and external sustainability, and interactions and feedbacks among policy and endogenous variables affecting debt ratios. This paper examines current fragilities in emerging markets and notes that domestic debt is of concern. March, 2008
China has become, by far the largest creditor in the group of 'new' donors active in Africa. 'Old' donors are accusing China of "free riding" on the development efforts deployed by the international community and impairing debt sustainability in low-income countries (notwithstanding the fact that China has also granted debt relief). It is argued that corruption is enhanced, democracy impaired, and debt tolerance weakened by China’s financing practices. December, 2007 (pdf format)
The new Framework aims to put debt at the center of the IFIs decision-making process. Nonetheless, the philosophy that informs the entire proposal does not come close to addressing the problem of long-term real sustainability from the perspective of creating conditions for low-income countries to attain the Millennium Development Goals. Eurodad’s briefing sets out what the new framework means for developing countries’ ability to meet the MDGs and achieve social justice for their peoples. September, 2005
Starting in the 1980s several schemes have increasingly recognized the need for debt relief and debt cancellation. The HIPC initiative, in 1996, was the first scheme to address the debt problem in a comprehensive manner, providing the means for reduction of two-thirds of debt for the beneficiary countries. The discussions leading to the adoption of the Debt Sustainability Framework stressed this would only address the debt problem in a forward-looking way, that is, ruling out further cancellation a-la-HIPC. April, 2006
Eurodad presents "To Pay or To Develop", a handbook on debt sustainability. This publication clarifies different conceptions, a year after the first implementation of WB/IMF Debt Sustainability Framework. This handbook was originally produced and released in the German language by erlassjahr.de, a member of the Eurodad network.
May, 2006
One year after the Multilateral Debt Relief Initiative, and the G8 promise of contributing decisively to the achievement of the Millennium Development Goals, some impoverished countries face tough decisions. They have new sources of finance to turn to, but the World Bank plans to penalise them if they do so. New Eurodad report which looks at the World Bank's free rider policy and the rise of emerging lenders. January, 2007
The Group of 8 (G8) and the international financial institutions (IFIs) have recently emphasized their concerns about what they call "free-riding", i.e. the situation in which "non-concessional lenders indirectly obtain financial gain from IDA’s debt forgiveness, grants and concessional financing activities without paying for it". In fact, this notion covers two phenomena: on the one hand, other creditors not assuming their share of debt relief and on the other hand, developing countries getting into new cycles of debt with non-concessional lenders. May, 2007
The Commision created to investigate the Ecuadorean external indebtedness presented its final report.
According to Hugo Arias, member of CEIDEX, "the contribution of the investigation lies in casting light on new evidence, not so much on specific facts but above all on the historic process of indebtedness,
understood as the capture of the State and its institutions by domestic and foreign financial groups and by the governments of developed nations, in order to loot its resources and change the legal
framework of the State of law so as to reduce it to a minimal State". February, 2007
If for the creditor, the Third World debt can seem like a real gold mine, for the people living in Third World countries, it feels more like a straight jacket. However the debt is a story very complicated, that can be entangled, unclear, and often very questionable. A debt audit allows us to answer a lot of questions. It allows us to reconstruct the sequence of events which have led to the present deadlock. And it enables us to avoid repeating the mistakes of the past. November, 2006
Each year the governments currently in office allocate nearly half of their state budget revenues to public debt service, irresponsibly sacrificing both social and infrastructure investment, thus causing irreparable economic, social and environmental damage to the country. Citizens have the right to ask for accountability and to audit public debt, in an independent way or in coordination with government. May, 2006
"The External Debt of the countries of the South…is illegitimate, unjust, and ethically, legally, and politically unsustainable." - Verdict, International Peoples' Tribunal on Debt, February 2, 2002, Porto Alegre, Brazil
For some time now, various campaigns and organizations concerned with the question of Debt have been calling for the realization of official Audits of the debt that is claimed of each of our countries. As part of this initiative, Jubilee South came together in this International Workshop and Seminar on Debt Auditing, in Brasilia, in order to advance the political and methodological debate on the importance and characteristics of the proposed Audits, as well as to review the experiences of different countries in the region. November, 2004
Yes, debt audits work! Brazil managed to reduce its foreign debt stock by half after a debt audit initiated by the government of Getúlio Vargas in 1943. As of today, this is one of, if not, ‘the’ most successful experience in terms of achieving actual debt cancellation as a result of an auditing process. Brazil has also engaged in other audit efforts more recently.
From a global perspective, mechanisms of unfair exchange and falling terms of trade have prevented economic development for countries in deficit vis-à-vis those countries showing a surplus. The breeding ground for these mechanisms was set in the terms of agreement of the Bretton Woods Institutions.
The Debt Audit Commission is a presidential initiative aimed at knowing “how much is owed and why is it that so much is owed”, as well as at making progress towards a state policy; however, the results of this investigation will not necessarily imply that the country stops paying. February, 2006
The present debate on types of sovereign debts and the legal quality of claims may be interpreted as re-visiting the past. Before World War II basic legal principles had been observed in the case of Southern Countries, which present "debt management" has refused to respect. Sovereign Southern debtors were treated very differently before the Bretton Woods Institutions became "debt managers". After 1970 legal considerations lost importance. January, 2009
This document is Eurodad’s response to the World Bank’s September 2007 discussion paper: "The concept of odious debt: some considerations". It provides input for the round-table on odious debt and responsible lending which was hosted by the World Bank on 14 April 2008. More specifically it points to the paper’s one-sided treatment of the subject and provides counter-arguments to many of those levied by the World Bank in opposition to the concept of odious debt. March, 2008
The history of the struggle for debt cancellation is full with successes and missed opportunities. For more than a decade, civil society organizations, academics, and even government representatives and those of multilateral bodies, have been discussing points of view, strategies and alternative proposals with varying degrees of success in the attempt to reach a consensus. Although we have already come a long way, much still lies ahead before recognition of debt illegitimacy is fully achieved. The way forward involves finding spaces for debating the different conceptions and definitions surrounding illegitimate debt, agreeing on common strategies, methodologies and indicators for the analysis of such debt. April, 2008
After 2005 a select few of the world's poorest countries have received substantial debt cancellation. But most countries have received little or no debt cancellation. Debt remains one of the main barriers to development in many of the world’s poorest countries, and in many so-called middle-income countries. Much of that debt is illegitimate. This fact is increasingly recognised as important and lends much weight to the idea of repudiation. February, 2007
Some debts should not be paid. They should not be repaid because creditors bear a large part of the responsibility for having extended loans irresponsibly and negligently. Many civil society organisations believe that creditors need to be held to account for the bad decisions they have made and share responsibility for illegitimate debt. This report highlights a number of concrete cases of illegitimate debts - Canada, France, Germany, Japan, Italy, UK and USA – which are a result of irresponsible lending. February 2007 (pdf version).
Global reforms have been few and far between since neoliberalism took hold at the world scale during the 1980s. The October 2005 Soria Moria Declaration of the governing coalition set some high standards for shifts in North-South financial relations. However, much deeper dilemmas remain, because some of the Norwegian reforms legitimate the existing system rather than, confronting and weakening it. January, 2007
During Eurodad's Annual Conference 2006, celebrated in Berlin from 29 to 31 October, the hot topics were illegitimate debt and responsible finance. In the first sesion, Ashfaq Khalfan, from the Centre for International Sustainable Development Law, pointed out some key elements on these issues. The definition of the odious debt doctrine; its status in international law; the mechanisms through which the doctrine may be applied in dispute resolution; and areas of 'illegitimate debt' that the odious debts doctrine does not cover. (pdf format) November, 2006
The international conference on the cancellation of illegitimate debts brought together 150 participants from civil society organizations, governments, social movements and creditor agencies for a discussion on the extent and impact of illegitimate and odious debts on the people of the Southern countries. It also sought to expose and drum out support for the campaign against dictatorship debts incurred by Southern dictators in collaboration with western allies. June, 2006
In the development literature, there exists no systematic study of external borrowing in post-conflict countries. The authors address this gap by analyzing statistical and case study evidence from three African countries. They find that many war-affected countries face rising debt arrears and deteriorating relations with creditors. Rebuilding trust between lenders and borrowers is hence a crucial but often slow process. Furthermore, donors to war-affected African countries have been slow to grant exceptional debt relief based odious debt or on financial requirements. Debt relief for post-conflict reconstruction should embrace a more forward-looking and more generous conditionality. (pdf format) July, 2006
Now, Lebanon will again call upon foreign capital to rebuild. This implies another increase in its debt and in new economic measures of structural adjustment which accompany it. Therefore, the Lebanese people are going to have to pay very dearly, in the years to come, for consequences of this war inflicted by Israel in violation of international treaties governing relations between states. August 2006.
At a basic level, the legitimacy of Africa’s debts is highly questionable. Many of the loans,
which are being re-paid now, were made during the Cold War to repressive regimes and corrupt leaders, who used the money to strengthen their rule or to line their own pockets. This report is a useful piece of work that draws on the failures by the creditor nations to acknowledge the share of their blame in contributing to this crisis. (pdf format) 2005
This report argues that debt servicing at any level is incompatible with attaining the UN Millennium Development Goals (MDGs) in many African countries. The authors outline a brief history of the debt crisis and the Heavily Indebted Poor Country (HIPC) initiative before addressing questions of sustainability and future classifications of indebted countries. December, 2004
The failure of structural adjustment and the possibility for a democratic approach to economic policy. Paper presented to the Parliamentary Initiative on the Mozambican External Debt Assembly of the Republic.
2005 was supposed to be a year of action for Africa, with demands for "more and better aid, debt cancellation and more just trade policies". What happened? Charles Abugre from Christian Aid offers some insights into the demands and provides pointers on where African civil society should focus their energies in the related areas of aid, debt and trade. February, 2006
In 2005 the IMF, World Bank, and African Development Bank, responding to proposals from the Group of 8 industrialized countries, promised to eliminate 100% of the debts they claim from 18 countries, 14 of them in Africa. The deal applies only to countries that have completed the HIPC debt initiative of the IMF/World Bank, a manipulative process that entices governments to adhere to devastating structural adjustment conditions for the promise of what has so far been very modest debt relief. However the G8/IFI deal ultimately plays out and it could be part of a significant shift in the work we do on debt. March, 2006
An International Centre for the Settlement of Investment Disputes tribunal has struck out a lawsuit against the Kenyan government over a contract dispute after it discovered the contract had been secured illegally through a US$2 million bribe paid to former President Daniel arap Moi. December, 2006
