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In the Balance: Why debts must be cancelled now to meet the Millennium Development Goals: A paper for World Debt Day
Introduction
The poorest people in the world are trapped in a cycle of poverty and powerlessness. This is perpetuated, at least in part, by the unremitting demands of the rich world for money from the poor world in debt payments. These demands continue regardless of the source of the debts or the impact on the poor of their being paid.
It is now accepted that on current trends the Millennium Development Goals, which 189 governments agreed to achieve by 2015, will not be met for more than 100 years. These are not notional goals for the total eradication of the poverty gripping much of the world, but were intended as achievable, realistic targets simply for the partial alleviation by 2015 of extreme poverty. The collective response of the richest and most powerful nations in the face of this monumental global failure has, so far, been grotesquely inadequate. Their unwillingness to accept responsibility for their role in creating and perpetuating the current debt crisis and other causes of global poverty – while allowing the poorest and most powerless to pay with their lives – is shameful.
Recently, in face of vocal and determined demands for debt cancellation from campaigners and activists around the world, some governments have set out proposals for how the international community might agree to greater debt cancellation or have even committed themselves to further debt relief. Though none of these proposals goes far enough yet, we very much welcome this willingness to address the problem, and hope it signals a determination to offer a proper response to the debt crisis. Now is the time to act – and we set out in this briefing what we believe must be done.
- Debts must be cancelled as a matter of justice: creditors must accept their share of responsibility in creating the current debt crisis, and cancel debts on this basis.
- Cancellation must be available to all countries that need it: our analysis of the financing required to meet the Millennium Development Goals indicates that at least 62 poor countries need 100% debt cancellation now.
- There should be accountability but not economic policy conditions: the governments of indebted countries must demonstrate to their citizens that they are spending money well and accountably. But this must not be used as an excuse to impose economic policy conditions.
- All unpayable debts must be cancelled: this must include all multilateral, bilateral and commercial debts.
- Debts must be cancelled in full: debt service cancellation for a limited period is not enough. Debts must be completely written off.
- Debt relief must provide additional resources for poverty reduction: if debt cancellation is to make a difference to the poorest people in the world, it must release extra funds and not be paid for by taking money out of aid budgets. For all 62 countries, this will require $45.7bn per year. Finally, we include the questions that we will ask about any proposal for debt cancellation put forward by the G8, to determine whether it will make a serious contribution to making poverty history.