Drop the Debt

For more information and to support the 'drop the Debt campaign see Jubilee Debt web Group - www.jdc-web.org.uk

	1.2 B people exist on <$1/day (1 in 5 of the worlds population)
	1 in 2 exist on < $2/day

	The poor countries pay $60M / day to the West in debt repayments ($22B/year).
	In Many countries debt repayments are 2 times spend on health.

	G7 have promised $100B to cancel debt
	So far actually given £13B

Highlights

Jubilee 2000 has estimated that it would actually cost $ 71 billion to cancel all the debts owed by 52 of the poorest countries (which have a face value of $376 billion). This is the real cost of debt cancellation - only one third of one percent of the annual income of the richest (OECD) countries. Over 20 years, this would cost each person in those countries less than $4 a year – which is less than 1p a day.

Mozambique after the worst floods in history will still pay $45 million a year in debt repayments, a figure considered sustainable by the IMF and World Bank

For Malawi, External debt service was $100m in 1999, more than a third of government revenue, and almost equivalent to health and education spending combined.

Oxfam - Zambia -Headline figures on debt relief are more misleading than usual in the case of Zambia. The debt sustainability analysis carried out by IMF/World Bank staff shows that:

Actual debt service payments will increase sharply, from $136m in 1999 to $170m in 2000 before peaking at $235m in 2002.
Debt repayments will increase from 24 per cent of government revenue today to 35 per cent in 2001-02
Average repayments for 2001-03 will be 46 per cent higher than for 1997-98.

Countries such as Burkina Faso, Mozambique, Niger and Tanzania are spending $3-$6 per capita a year on their health systems, which is insufficient to finance a package of basic health interventions. Yet each of these countries spends more than double on debt servicing what is spent on primary health care

J2000 estimate that for Britain:

	4 pence per British taxpayer per week would cancel the debt to Britain of the 52 most indebted poor countries;
	the cost of the Millennium Dome would pay Britain's share of cancelling all of the debts of the 18 countries with the lowest Human Development Indicators, as calculated by the United Nations;
	half of the profits British accountholders made when building societies converted to banks would have paid Britain's share of cancelling the debts of all the countries of South Asia and sub-Saharan Africa;
	the cost to the taxpayer of the British civil nuclear programme is similar to the British share of canceling all developing country debt;
	ending off-shore tax evasion would pay Britain's share of cancelling all developing country debt, allow the aid budget to be doubled, and still have money left over;
	the cost of maintaining Britain's nuclear deterrent would pay Britain's share of cancelling the entire debt of all low income countries; and
	a “Tobin tax” of just 0.01% (one hundredth of one percent -- one penny in £100) on international foreign exchange and derivatives transactions would pay off all developing country debt.

Where did the debt come from?

Back in the 60's when there was a lot of free money floating round due to increased oil prices, the West tried to assist the poorest countries by lending them a lot of money. So much they could never pay it back. Like anyone else who makes a bad business decision, the West should take responsibility and write off those debts.

Attention is focused on the poorest countries; incapable of repaying the debt. These are identified and known as HIPC's. Of course there are disagreements a to which countries qualify. Generally countries at war or so corrupt that the money would simply go into Swiss bank accounts are excluded. The World Bank and International Monetary Fund, and the G7 countries all work to the WB list of about 42 countries. Jubilee 2000 and others would wish to se at least 52 countries included.

On the surface everyone has agreed to the principle. See later for the real barriers. But the policy is that each country has to produce a plan showing that the money will be used to alleviate poverty (OK in principle) before the debt is forgiven. Then if for three years the plans are pursued, then the debt is forgive! In the meanwhile, the countries have to accept the conditions imposed by the WB/IMF which generally follow a Western, capitalist and free market agenda, whereby the West can effectively market goods and capital in the countries whilst sheltering behind the West's own trade barriers to protect Western business (and a lot of other similar one way issues)

The data from the WB/IMF of the cost at NPV is:-

Organisation	Cost for first 32 countries $Billion
Multilateral	14.0
World Bank	6.2
IMF	2.2
AfDB/AfDf	2.3
IaDB	1.1
other	2.2
Bilateral	14.6
Paris Club	11.4
Other bilateral	01.7
Commercial banks	00.9


Total	28.6