By the year 2015 all 191 United Nations member states have pledged to:

• Address the least developed countries' special needs. This includes...enhanced debt relief for heavily indebted poor countries; cancellation of official bilateral debt; and more generous official development assistance for countries committed to poverty reduction
• Deal comprehensively with developing countries' debt problems through national and international measures to make debt sustainable in the long term
» UN

Total external debt of partner countries in 2004

	United Kingdom	Nicaragua	Senegal	South Africa	France	Germany
External debt ($)	4.71 trillion	4.57 billion	3.48 billion	27.0 billion	1.06 trillion (2002)	*

*data not available
Source: The Central Intelligence Agency (2005) The World Fact Book

The debt the British, German and French governments owe is to their federal reserves, private pension funds, mutual funds, local governments, commercial banks as well as to some foreign and international sources

Comparing total debt service as a percentage of GDP with public health expenditure

	United Kingdom	Nicaragua	Senegal	South Africa	France	Germany
Total debt service as a percentage of GDP in 2000	*	12.5	5.2	3.1	*	*
Public health expenditure as a percentage of GDP in 2001	6.2	3.8	2.8	3.6	7.3	8.1

*data not available
Source: United Nations Human Development Reports 2002

Both Nicaragua and Senegal spend more on debt service than on primary education or health. In Nicaragua debt servicing absorbs more than two-thirds of government revenue, $55 per person in 1997, by comparison, spending on primary education amounts to less than $10 per capita (Oxfam International (2000)The Oxfam Education Report ).   Each man, woman and child in Nicaragua effectively owes more than $1000 to the rich world, this is more than twice the average annual income. (Oxfam International Report Education Now: break the cycle of poverty)
Source: (Oxfam International (2000)The Oxfam Education Report)

Expenditure on primary education in Senegal in 2001 was around $64 million, whereas $159 million was spent on servicing debt (Oxfam International (2001)G8: Failing the World's Children).

Senegal and Nicaragua both qualify as 'Highly Indebted Poor Countries' (HIPC's) as part of a World Bank initiative to reduce the external debt of the world's poorest, most heavily indebted countries. The initiative aims to facilitate a transition to debt sustainability, with attendant benefits for poverty reduction and investment in education and health (www.worldbank.org). South Africa does not qualify for HIPC status but debt is still a major issue for the country, in 1996 it paid £2.3 billion in debt service. That was enough to have given free health care to the entire population, built 300,000 new homes, and have money left over to build some schools (Action for Southern Africa (1998)
» ACTSA


The world's most impoverished countries have already repaid far more than they originally borrowed. Africa has paid back $550bn in principal and interest over the last three decades, on $540bn of loans, yet they still go on paying.
» BBC

• Total external debt of low-income countries - $523 billion
• Total debt service being paid every day by low-income countries - $100 million
• For every $1 received in grant aid, low income countries pay $2.30 in debt service
• Sub-Saharan Africa receives $10 billion in aid every year - but has to pay back at least this amount in debt repayments.
» Jubilee Debt Campaign

Twenty-three countries are now receiving some debt relief under the enhanced HIPC initiative. However debt relief has not gone far enough. Of the first 22 countries to receive debt relief, over half will spend more on debt than on primary education, and two thirds will still spend more servicing their debt than they spend on basic health care. Oxfam estimates that achieving universal primary education in these countries would cost $1.5 billion a year. Even after debt relief these countries will spend $1.8 billion servicing their debts in 2001.
Oxfam International (2001) G8 Failing the World's Children

In June 2005 US President Bush and Tony Blair spoke of a consensus that "highly indebted developing countries that are on the path to reform should not be burdened by mountains of debt" and stated that they were "well on the way" to an agreement.

However, it is possible that only countries which have completed the Heavily Indebted Poor Countries initiative would be included; this is only 18 countries (of which 15 are in Africa).


The Jubilee Debt Campaign believes that at least 62 low-income countries need total debt cancellation if they are to stand any chance of meeting the Millennium Development Goals. This agreement also does not look likely to cover all multilateral debts. President Bush referred specifically to debts owed to the World Bank and African Development Bank. However, it is unacceptable to exclude debts owed to the International Monetary Fund (IMF) and other multilateral institutions. Debts to the IMF account for about one third of HIPC debt.

Thirdly, there has not so far been any guarantee that cancellation will come with additional resources to off-set the cost of debt cancellation. This leaves open the possibility, previously called for by the US that cancellation will be paid for out of aid budgets. Moreover, neither Bush nor Blair addressed the issue of economic policy conditions on debt cancellation.

The HIPC initiative and other debt cancellation schemes all require countries to implement harmful and undemocratic conditions - such as enforced privatisations and trade liberalisation and cuts in public spending before receiving debt cancellation.
» Jubilee Debt Campaign

"...Nigeria is to be forgiven $18 billion of its debts (however) it is well to consider that the original debt was $5 billion, and my country has already paid back $16 billion interest. And yet the books say we still 'owe' $35 billion"
Ken Wiwa (2005) The Observer

Saving and Credit Schemes

Where these schemes have been set up they have empowered people to improve their own lives:

Nigeria

Individuals can save to apply for a loan from the local co-operative. Through such a loan a small piece of land can be bought on which to grow food or to build a house. The co-operative pays for childrens education.

Tanzania

The Caritas-DSM Savings and Credit Scheme (SCS) is aimed at poverty alleviation to the poor and low-income families through women in remote areas under the Archdiocese of Dar Es Salaam

The program is able to reach the poor that are excluded from other credit programs.

Since the program began in February, 1999 a number of women have been able to build residential houses, buy plots of land for housing, sent their children to good schools, pay school fees, pay for medical expenses, acquire leadership skills and knowledge about their legal rights. As they repay the loan they save as well and this helps them plan ahead and deal with unexpected emergencies.

Vietnam

Interest rates are kept low at 1.5 per cent per month for sustainability purposes. Groups of 5 persons are formed as basic units of a savings and credit scheme. The members of the group hold regular weekly / monthly meetings to develop and improve their solidarity, mutual understanding and undertake credit and savings as well as social activities. It is up to the people to decide on how use the money for the purpose of income generating activities. A "small loan small repayment" policy is applied. Loans need to be repaid through weekly installments that are collected by the group leaders and consist of three components: principal, interest and savings

Senegal

An Australian Aid agency called CCF has made loans available to more than 4,770 people distributed through a credit union. Of these people, 90 per cent are women. Many had never previously received a loan. The basic loan is offered with two per cent interest over 12 months. Throughout the repayment period, the borrower is required to save 10 per cent of the amount received. As the loan is paid back, the mandatory savings are returned to the participants.