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Drop the Debt

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.

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.

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. 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.

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