Debt in 2012: The Numbers

This publication by the SJC highlights the most recent figures concerning debt in impoverished nations. The numbers discussed below were obtained from international financial institutions.

Debt in the developing world has evolved in a long and complex process. Understanding it requires looking at the decisions of institutions like the IMF and the World Bank as well as the individuals in the countries that they effect. These individuals are rarely involved in the decisions that shape their standard of living. The numbers only slightly illuminate the reality of debt and debt repayment.

The Rise of Debt: the 1970s

  • Lending to countries in Africa, Asia and Latin America increased significantly during the 1970s. Major banks lent money to these countries without considering what the money was being spent on and whether or not loans could be repaid.
  • Between 1970 and 1982, the total amount of debt owed by impoverished nations was increased by a factor of 8. The percentage of developing nations’ Gross Domestic Product (GDP) representing amounts paid in interest to lenders quadrupled during this period.

The Onset of the Debt Crisis: the 1980s

  • In 1972, the average interest rate paid by the impoverished nations was 5.4%. In 1981, the rate continued to skyrocket, reaching 16.8%. This dramatic inflation plunged many developing nations into a crisis in which they faced unsustainable debt payments.
  • The money was used to fund “prestige projects” by dictators and undemocratically elected governments. Some governments that were funded include the Mobutu in Zaire, Marcos in the Philippines and the apartheid government in South Africa.
  • This kind of debt is often referred to as “odious” because the funds were not used to benefit the people, and lenders were aware of what the money was to be used for.

Main Indicators of Debt Levels in Developing Nations
Between 1970 and 1982








Total external debt (millions of USD)








Annual debt payment as a percentage of GDP








Annual interest payment as a percentage of GDP








Source: World Bank, World Development Report 1985, Table 2.6, p. 24

The Crisis Escalates: the 1990s

  • The onset of protectionist policies by industrialized countries around the world began to impede developing nations’ ability to emerge from their state of extreme indebtedness.
  • These nations had to incur more loans to be able to make the annual interest payments demanded by international lenders. Such loans came with strings attached that were detrimental to the standard of living for the individuals within the country.
  • The IMF and World Bank insist on a particular sort of project when managing the debt of poorer countries. Aid was given to these countries only if they agreed to institute policies of economic liberalization. These economic requirements result in decreased spending on health and education and resulted in a decreased standard of living for individuals.
  • The focus of the these programs continues to be on economic indicators with limited regard for the effect on individuals and their quality of life.

State of Debt in Developing Nations: 2003-2010

  • Between 2003 and 2007 total debt levels in developing nations increased by a factor of 1.3.
  • Between 2003 and 2007, payments made by impoverished nations represent almost half of what their total debt level was in 2003.
  • In 2006, the citizens of Zimbabwe spent over 420,000 USD per day repaying odious debt. Zimbabwe is home to over 12 million people, 80 percent of which must survive on less than 1 USD per day.
  • In 2007, developing nations spent over 14 billion USD on principal and interest payments. The debt level continued to increase during this period.

Debt Levels Between 2003 and 2007

Debt level in 2003

2570 billion USD

Total payments (principal plus interest) paid by developing nations between 2003 and 2007 (in 2003 dollars)

1147 billion USD (45% of total debt in 2003)

Debt level in 2007

3360 billion USD

Source: SJC’s calculations based on figures from the FMI’s World Economic Outlook Database, April 2008

  • Data from the most recent Global Development Finance Report made by the World Bank shows that total external debt stocks owed by developing countries increased during twelve months by 200% to stand at $4 trillion dollars in 2010.
  • The most recent financial crisis has drawn attention to the debt owed by wealthier nations. US gross external debts reflected 95% of GDP and the European Union owed 85% of its GDP in 2010. These debts are balanced by debt owed to them. Poorer countries lack overseas assets to balance their debts and thus continue to suffer.

Indicators of Debt Levels 2005-2010







Total External Debt (billion USD)







External Debt outstanding to GNI (%)







Source: Global Development Finance 2012, Table 1, pg. 2

The Heavily Indebted Poor Countries (HIPC) Initiative

  • The HIPC initiative lists 41 impoverished countries, the majority of which are located in Sub-Saharan Africa. The HIPC Initiative, established in 1996, offers strategies for these nations to surface from their state of extreme indebtedness.
  • Unfortunately, experts have called these strategies into question, and the speed at which they have been implemented has been insufficient thus far to allow these nations to emerge from the crisis.
  • The HIPC Initiative has not achieved the objectives it was created for, nor has it been able to help arm impoverished nations against the insurmountable effects of the recent economic crisis.

 The Debt of Heavily Indebted Poor Countries for 2010
in Millions of US Dollars

Selected HIPC

Total External Debt







Sao Tome and Principe


Source: Global Development Finance 2012, Country Tables

Summary of Major Criticisms

  • Numbers only exist up to the 2010 period. It is difficult to make accurate predictions concerning debt projections for the future. However, debt may amount but be hidden by periods of relative economic productivity. When a crisis hits, developing countries are hit especially hard, always.
  • Debt lending has been reckless in the past. It has resulted in developing countries having little control over their debt management while banks hold most of the power. This is to the detriment of individuals within the country. Even the HIPC Initiative has failed to address this.

The Social Justice Committee of Montreal urges the Canadian government to argue for a closer examination of the debt of third world countries, with the aim of identifying credible and practicable policy options for addressing debt that has been deemed odious and thus unenforceable.

This could specifically be pursued by improving measurement methods to ensure a fast response to debt crises.


1. Global Development Finance 2012

2. Poverty Matters Blog: a Developing World of Debt (for useful graphics)

3. The Human Rights Effects of World Bank Structural Adjustment, 1981-2000 in International Studies Quarterly (2006).

4. Recent Development on Odious and Illegitimate Debt in Briefing Note Five of the Jubilee USA Network (2008).

5. Unfinished business: ten years of dropping the debt. Jubilee Debt Campaign (May 2008).


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