Eurodad member Jubilee Debt Campaign has released a new report giving an overview of developing world debt.
The report investigates the external debts of both governments and the private sector in the global South. Analysing recently-compiled data from international financial institutions, it finds that private sector debt payments out of impoverished countries are now double those of the public sector, a complete turnaround since the year 2000. High private sector debts have been the main cause of the financial crisis in countries such as Spain, Ireland, Iceland and the UK.
Across the 32 low and lower middle income countries where data is available, private sector external debt payments have increased from 4% of export earnings in 2000 to 10% in 2010. In contrast, government external debt payments for these countries have fallen from 20% of export revenues in 1998 to 5% in 2010. In these countries, the number of children enrolled in primary school has increased from 63% in 2000 to 83% in 2010.
The negative impacts of the financial crisis – including falling trade revenues, loss of money sent home from migrants and multinational companies sending more money back to the rich world – have seen lending to the 35 most impoverished country governments almost double from $5 billion in 2007 to $9 billion in 2009. As a result, government debt payments by impoverished countries are predicted to rise by a third by 2014.
Thirty-two countries have had $120 billion of debt cancelled over the last decade in response to the global Jubilee campaign. Government external debt payments in these countries have fallen from 20 per cent of government revenue in 1998 to less than 5% in 2010. In these countries, the number of children enrolled in primary school has increased from 63% in 2000 to 83% in 2010.
Thirty years of debt crisis have devastated livelihoods across the world. Although debt cancellation released some countries from one debt trap, the developed country Debt Crisis has led to government debts in impoverished countries the increase in unregulated and opaque private lending could increase inequality and the risk of crisis. The Developed Countries Debt Crisis shows yet again why reckless lending and borrowing need to be governed and controlled. A new system for monitoring and regulating the way money moves across the world is needed, so that finance works for the benefit of everyone.
Download the full report: The state of debt: Putting an end to 30 years of crisis