Archive for the 'Debt/ Dette/ Deuda' Category

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).


Jamaica Case Study


Writing the country profile for Jamaica and exploring the development and impact of the huge foreign debt that has accumulated in the country were one of my first tasks for the ‘Social Justice Committee’. Working for the ‘Social Justice Committee’ has allowed me to research and encourage greater awareness of social issues that plague the developing countries in an environment surrounded by talented, young ‘justice-enthusiasts’ who are keen to share their broad knowledge of social issues and engage in debate about these issues. The case study of Jamaica I created was interesting because I was able to use a variety of sources, from information by the IMF to Civil Society Groups to a 2001 documentary film exploring poverty in Jamaica, in order to gain a comprehensive and unbiased description of the sources of Jamaica’s economic problems as well as attempts to alleviate the problems. I was shocked to discover that, despite the country’s debt problems and the government’s resulting inability to confront more pertinent issues of domestic poverty, Jamaica has been the recipient of World Bank ‘Climate Investment Funds’. While the debt situation in Jamaica continues to be problematic and to inhibit the country’s ability to address social and economic issues, organizations like the ‘Social Justice Committee’ have made substantial efforts to bring attention to the impact of the debt burden on poor countries and encourage global action such as debt cancellation, which provides the best hope for these countries to remove themselves from poverty.

By Tara Param


Country: Jamaica
Population: 2.7 million
Capital: Kingston
Major Language: English
Major Religion: Christianity
Life Expectancy: 71 years (men), 76 years (women)
Monetary Unit: 1 Jamaican dollar = 100 cents
Main Exports: Bauxite, alumina, garments, sugar, bananas, rum
GNI per capita: US $4,800
Leader: Queen Elizabeth II (Head of State)
Portia Simpson-Miller (Prime Minister)
Present Value of External Debt: $13,245,898,200 (US$)
Portion of Debt Owed To Whom: $4.5 billion owed to IMF, World Bank and the Inter-American Development Bank


Jamaica is the fourth most indebted country in the world, but how did this happen?
Since Jamaica peacefully secured its independence from British colonial rule in 1962, in politics, it has been able to sustain relatively stable democracy. However, Jamaica’s economy suffered from its colonial legacy, creating a reliance on exporting cash crops such as sugar, cocoa and coffee.

Jamaica was initially very reluctant to accept loans from the International Monetary Fund, the IMF, because these loans typically require the donor country to implement strict austerity measures. Jamaica’s Former Prime Minister Michael Manley in a post-independence speech stated, “The Jamaican government will not accept anybody, anywhere in the world telling us what to do in our own country. Above all, we’re not for sale”. It was this non-IMF platform that won him the election in 1976. However, amidst growing economic problems, Jamaica was faced with a lack of alternatives.

The only solution Jamaica saw to its growing economic problems was external borrowing, and Jamaica was forced to sign its first loan agreement with the IMF in 1977. Developing countries were advised that if they borrowed money and invested in modernizing their economies, this would cause their economies to ‘take off’ making repayment of loans much easier. Although there was some initial success, the 1970s oil crisis increased the amount Jamaica had to borrow, while the global recession led to shrinking revenues and panic among Western banks, which began calling in their debts. As a result of these factors Jamaica’s national debt tripled as a percentage of GDP between 1973 and 1979. Almost all of Jamaica’s debt is external, sourced from institutions such as the World Bank, the IMF, and the Inter-American Development Bank.

The debt accelerated once again in the 1980s, as Jamaica sought loans from the IMF to pay back existing creditors and keep the country running. IMF loans required implementation of Structural Adjustment Policies (SAPs), which involved remodeling the economy in areas such as public spending, trade policy, and regulation. These SAPs required devaluation, removal of price controls, de-regulation of import controls, tighter monetary and fiscal policy, deregulation and privatization. However, implementation of SAPs is usually accompanied by, at least initially, a worsening of the distribution of income, which led to a decline in living standards in Jamaica during this time. Imposing strict austerity measures, including slashing spending on public services, has had a directly negative effect on Jamaica’s ability to provide social services to its citizens. Education standards fell and fees were introduced to many vital public services that previously were free.

The IMF are controlled by developed countries in the West and therefore the IMF took advantage of the indebted government’s need, by demanded a system which effectively replaced locally made product with imports from the developed countries, causing Jamaica’s industry to decline. Jamaica’s dependence on imports has increased their debt burden, making the country less competitive in the international markets.

Today, Jamaica is one of the most indebted countries in the world. Figures from the World Bank Global Development Finance indicators show that the Jamaican government spends 28 per cent of the country’s revenues from exports on debt repayments, the highest amount of any developing country. The recent global recession has further exacerbated Jamaica’s problems. Jamaica is now borrowing more money from the IMF to stay afloat. Despite the unmanageable size of Jamaica’s debt, Jamaica has never been considered for debt cancellation because it has been deemed ‘not poor enough’.


Although Jamaica is one of the most heavily indebted countries in the world, it has recently been the recipient of climate loans, which have exacerbated Jamaica’s already debilitating debt burden.

The ‘Climate Investment Funds’ (CIFs) are funds to help developing countries pilot low-emissions and climate-resilient development. However, there has been widespread criticism from civil society actors around the world about the funds. Many argue that the World Bank is not the appropriate channel for climate finance because of its poor reputation in the past in the area of climate change. The World Bank has actually increased lending for fossil fuels and continues to finance dirty technologies. In addition, the lack of input of developing countries in the design and promotion of the CIFs has provoked further criticism. The lack of guarantee from the World Bank that the funds will be additional to previously agreed development aid has created fear among the developing world. While the use of loans rather than grants risks increasing Jamaica’s already heavy debt burden.

The UK has lent Jamaica a $10 million climate loan intended to help Jamaica deal with climate change, however many civil society groups argue that the World bank and the UK government should be cancelling Jamaica’s debt, rather than contributing to it through these climate loans. It is widely acknowledged that rich industrialized countries are historically responsible for climate change and that poor developing countries should be given the same opportunities to industrialize without setting limits on their abilities to develop. Developed countries should take responsibility to address climate change, as they are in a better position to do so, allowing Jamaica to deal with its domestic problems.

Africa has also been the recipient of huge amounts of loans to cope with the impact of climate change. The money will be spent on schemes to install solar power plants and encouraging investment in low-carbon transport. These loans cause the debt problems in these countries to worsen. Loans should be focused on ensuring that these indebted countries can deal with these debt problems and help them to provide better social services to their citizens.

Following the recent financial crisis, many of the most heavily indebted countries are already in a vulnerable economic position, and these loans for climate finance have the potential to push these countries further towards economic collapse. It has been discovered that only one sixth of the pledged funds from the World Bank will be delivered as grants and over one third of CIF funding is channeled to the private sector. It has been found that, all too often, public funds intended for climate and development purposes in the poorest countries are being used instead for subsidizing high and middle income countries’ private sectors. It is important that countries such as Jamaica are provided with means to address their excessive debt situation. By contributing to Jamaica’s already unsustainable debt burden, these loans have debilitated the Jamaican government’s ability to provide basic rights and services to its citizens.

The debt situation today in Jamaica continues to be alarming and continues to restrict economic growth by drawing heavily upon resources that could be put to more productive use. In order to improve the economic situation, policies aimed at sustainable growth, such as a greater investment in education, have to be implemented to increase human capital and the labor force’s productivity.


“Jamaica’s Debt: Exploring Causes and Strategies.” CaPRI. Mar. 2008 <;.

“BBC News – Jamaica Country Profile.” BBC News – Home. 10 Jan. 2012 <;.

“Country Information: Jamaica.” Jubilee Debt Campaign UK. Apr. 2011 <;.

“Jamaica | Data.” Data | The World Bank. <;.

Williams, Carey. “Third World Debt Crises – The Jamaican Experience.” Economics. Web. <;.

“Why Debt Repudiation Is a Common Sense Approach to Jamaica’s Economic Crisis.” Jamaica Resist. 29 Oct. 2011 <;.

“UK Lends ‘climate Loan’ to Heavily Indebted Jamaica.” Global Justice Campaigners Tackling the Causes of Poverty. 4 Nov. 2011 <‘climate-loan’-heavily-indebted-jamaica&gt;.

“Storm on the Horizon? Why World Bank Climate Investment Funds could do more harm than good.” Eurodad: Nora Honkaniemi. Feb. 2011 <;.

“World Bank Climate Funds: “a Huge Leap Backwards”” Bretton Woods Project. 1 Apr. 2008 <;.

“Jamaica’s Debt Burden Is Also Yours.” Jamaica Gleaner News. 8 Apr. 2009. <;.

Handa, Sudhanshu and King, Damien. “Structural Adjustment Policies, Income Distribution and Poverty: A Review of the Jamaican Experience”. Centre for International Studies. 1996 <;

“Jubilee Debt Campaign UK : Country Information : Jamaica.” Jubilee Debt Campaign UK : Home : Drop the Debt. Apr. 2011. Web. < 4109.twl>.

“About Life and Death”. A Film by Stephanie Black. 2001

Sheckleford, Michale. “Jamaica: Debt, Economic Performance and Labour Productivity.”. Council on Hemispheric Affairs. 6 Sept. 2006. Web. <;.


The Reality of the EITI in Zambia

Khadija Sharife explains that, although the goal of the Extractive Industry Transparency Initiative (EITI) was originally to eliminate corruption by demanding more transparency over relations between mining companies and governments, the reality is that corporate corruption is constantly on the rise.

The logic goes that, so long as there is disclosure of cash payments within national boundaries, transparency will act as a natural sanction – diminishing the potential for, and realisation of, corruption. It is a logic that appears to bank on political or “demand-side” corruption, chiefly innate to the developing country’s character – with corporations simply “going along” with the system – a kind of “when in Rome” response.
But the EITI theory is vastly different from the reality and has more to do with corporate and “first world” country supply-side corruption. Zambia’s first report, for instance, revealed that mining companies remitted $463 million in payments to the government in 2008. The EITI report claims “significant discrepencies” noting a net total of “unresolved discrepencies” of $66 million.

Read more here

Nkana mine Open Pit and Head Gear. Photo by Per Arne Wilson

A Letter to the Los Angeles Times: “Please, Stop trying to ‘Fix’ Honduras”

Jesse Freeston explains that, contrary to what was published in a Los Angeles Times Op-Ed, what Honduras needs right now is an entirely new constitution in order to address the increasing poverty rates.

For the authors, the problem to be solved is one of political instability, a power struggle amongst politicians that to be avoided by way of slight tweaks to the constitution. The real crisis in Honduras is the 300,000 rural families without access to land, not counting the thousands that have fled the country entirely.

Read more here

Aide au développement : les promesses de 2005 ne sont toujours pas tenues

L’OCDE a annoncé mercredi que les promesses des pays riches pour l’aide publique au développement ne sont toujours pas tenues, et craignent une diminution de l’aide en vue des plans d’austérité budgétaires prévus.

La Presse, 6 avril 2011

“«Il manque encore quelque 19 milliards de dollars», estime l’OCDE. (…)Face à la générosité flageolante des pays riches, l’OCDE compte désormais sur une coopération accrue avec les puissances émergentes, de plus en plus présentes en Afrique, pour parvenir à réduire la pauvreté.”

Lire l’article:

Wikimedia, crédit: Romanceor

Questionner la notion de dette écologique du Nord vis-à-vis du Sud

Le Journal des Alternatives publie un article fort intéressant sur la notion de dette écologique et des différentes questions pratiques et morales qu’elle soulève. A lire absolument!

6 avril, Alternatives:

“Au Nord, qui a profité du mode de production capitaliste productiviste depuis un peu plus de deux siècles ? (…)Afin de donner une réponse simple, je dis que les réparations que le Nord doit verser aux peuples du Sud de la planète doivent être prélevées, au Nord, sur les classes et les entreprises qui portent la responsabilité de cette dette.”

Retrouvez l’article sur Alternatives

Miller-McCune Journal

Half a Million People Descended on London to Protest Corporate Tax Dodgers

On March 28th, nearly 500,000 people marched in London protesting the British government’s recent cuts to public spending. Many economists claim the tax cuts are the deepest since World War II.

The protests come after U.K. officials estimated corporate taxes would be reduced even as it tackles a $235 billion deficit and plans to cut more than 300,000 public sector jobs. Meanwhile, in the United States protesters gathered in 40 cities on Saturday to oppose tax cuts for the wealthy amid budget cuts to public services.

Read full article here.

More information here.

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