One of the most welcome events of the final years of the 20th century was the creation of the campaign which challenged international creditors to cancel the debts of the worlds poorest countries as a celebration of the millennium.
the quadrupling of the price of oil in the early 1980s, OPEC creditors
invested their huge surpluses of US dollars into the international money
markets prompting Western banks to go on a lending binge. Overwhelmed
by this new availability banks drastically reduced their lending criteria
and margins and set out to find new customers to whom to lend. Among the
many new avenues pursued were developing nations in Asia and Africa and
little heed was taken with regard to what kind of regimes were running
these countries. Not surprisingly, then, in many cases this money was
nefariously wasted or siphoned off to Swiss bank accounts by unscrupulous
rulers. At the same time interest rates on these (mainly) US$ loans spiralled
as the US Federal Reserve tried to quell runaway inflation. Exacerbating
the problem further was the plummeting in the price of commodities. As
a consequence when these loans started to mature debtor countries, in
almost every case, couldn't find the funds for repayment and the loans
had to be rolled over time and time again. This pushed these poor countries
further and further to the brink.
Coincidentally, at the same time, the International Monetary Fund (IMF) and World Bank set up the US$7-$10bn Heavily Indebted Poor Country (HIPC) Initiative in 1996 in an attempt to tackle the problems some of the worlds poorest countries were experiencing in making debt repayments. In this historic change of attitude, the IMF and World Bank accepted that some debt cancellation would be required if the poorest countries were to make any meaningful attempt at tackling the extreme poverty experienced by their people. In practice, however, this scheme proved disappointing in both the amounts available and in the conditions laid down by the creditors before any relief became due.
Jubilee 2000 was becoming more influential and better organised having
won the support of the churches, and international NGOs working
on poverty relief in the developing world. With this backing, and catching
the mood of the time, Jubilee 2000 now started to make waves and at the
G8 meeting in Birmingham in 1998, it mobilised an astonishing 70,000 supporters
to form a human chain round the building where the annual G8 meeting was
due to be held. On the same day 1,500,000 signatures from 50 countries
were presented to Clare Short, the UK International Development Secretary.
The result - just four hours later - a promise from Tony Blair and world
leaders to cancel US$50bn of the debts of the world's poorest countries.
To date international loans totalling more than US$77bn have been written-off the books of the 36 countries which have already reached the HIPC Completion Point. These countries are - Afghanistan, Benin, Bolivia, Burkina Faso, Burundi, Cameroon, Central African Rep., Chad, Comoros, Congo Rep., Cote d'Ivoire, Democratic Republic of Congo, Ethiopia, Gambia, Ghana, Guinea, Guinea-Bissau, Guyana, Haiti, Honduras, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Sao Tome & Principe, Senegal, Sierra Leone, Tanzania, Togo, Uganda and Zambia.
In total it will save these 36 countries $3.0bn annually in interest payments which will now be ring fenced and be made available for investment in health education, clean water and infrastructure.
(Eritrea, Somalia and Sudan are also potentially eligible for debt relief and Somalia and Sudan are actively said to be working to qualify.)
In early 2005, with the birth of the Make Poverty History campaign and the report by Tony Blair's Commission for Africa, debt relief for the poorest nations was again high up on the political agenda. And at the G8 meeting held at Gleneagles in July Tony Blair persuaded his fellow leaders to agree to cancel most of the outstanding international debts of countries which had reached the HIPC Completion Point.
and World Bank duly endorsed this decision in September, 2005 under the
Multilateral Debt Relief Initiative (MDRI) in order to provide further
support to HIPC's in efforts to reach the Millennium Development Goals.
So now once countries get through HIPC, MDRI means that they get cancellation
of more World Bank, IMF and African Development Bank debts than was originally
agreed at Completion Point. To date this has meant that countries completing
HIPC have seen another further amounts wiped off their outstanding debts
as a result of MDRI. This means the HIPC countries have benefited to an
amount of US$99bn in total loans written-off which represents more than
75% of their international debts.
In a further move the Paris Club of international creditors have now written-off $18bn or 60% of Nigeria's outstanding bilateral international debt of $30bn after Nigeria agreed to repay $12bn. This left Nigeria still owing US$5bn - mainly to the World Bank.
Now that rich countries have taken the pragmatic approach and forgiven most of the debts owed by many of the world's poorest countries what does the future hold for those countries whose debts have been cancelled?
For them the slate was almost wiped clean and money which would previously have been set aside for debt service payments freed up for investment in poverty reduction. Now, however, it seems that the World Bank and Western nations are again lending to impoverished nations and have not learned from the debt crisis and from Jubilee 2000 campaign. This is madness. Any future investment in poor countries should only be in the form of grants that can be properly monitored for the last thing we all want to see is poor people again carrying an intolerable burden of unpayable debts.
Now in 2020, a decade after the last major write-down, many African states are again in difficulties. Erlassjahr (Jubilee Germany) is currently drawing attention to the growing debt problems in as many as 40 African countries. Low interest rates across the world after the financial meltdown of 2008 encouraged many nations to borrow from international investors and, with Africa's prime export commodities/raw materials now commanding lower prices, governments there are finding it hard to meet their interest and repayment obligations. Of the 40 African countries flashing a debt warning, 26 went through the HIPC programme. One of these countries was Mozambique which ceased paying back its debts in January, 2017. In 2012 Mozambique's obligations to its creditors amounted to 40% of GDP, now the debt totals 130%. Part of this increase was borrowing to finance new armed vessels to patrol the coast line but somehow most of the funds here appear to have finished up in the pockets of the ruling elite. And investors who believed it was safe to lend to a country possessing large reserves of coal and natural gas are being made to wait, perhaps indefinitely. Mozambique is the first country to stop paying creditors in such a dramatic fashion since the debt crisis. But it seems that Gambia, Ghana and Senegal are also edging close to the wind. And since 2005 Ghana, Angola, Kenya and South Africa have seen a threefold level of debt increase. Nigeria's foreign debt is also again causing concern having shot back up to US$22bn in 2018.
It seems, then that poor countries have failed to learn the lessons of the debt crisis and neither have the international creditors.
* Jubilee 2000 was set up as a time limited campaign (1994-2000) seeking to convince rich countries and international institutions of the need to help the world's poorest countries by cancelling their unpayable debts as a celebration of the millennium. In these 7 years the Jubilee 2000 petition gathered 19.6m signatures from 165 countries making it the largest international petition. And taking the amount of debt relief promised by the G8 at December, 2000 - $110bn (£74bn) - this meant that each signature was worth $5,610 (£3,740). None of us regularly sign cheques for £3,740 yet each signature, often from people who had literally nothing else to give, was worth this large sum.
And in what could possibly be claimed to be another record, the total income of Jubilee 2000 from 1994-2000 was in the area of £5,000,000. If we take again the total debt relief promised by the G8 and the international institutions - $110 bn (£74bn) - it means that every £1 donated returned an incredible £14,800. Some investment!
Furthermore those supporters of Jubilee 2000 who went to Birmingham in May 1998 and took part in forming the human chain round the Conference Centre can EACH proudly claim to be responsible for 60 children now being in primary school in Uganda, the first country to receive debt relief.
And so, within the space of just 7 years, this small group of people who set up Jubilee 2000, which later became Jubilee Debt Campaign, saw their dream realised and as a result many people in poor countries are no longer being born into debt. And for Martin Wolf of the Financial Times 'Jubilee 2000 had become the world's most effective single issue initiative. Some ordinary idea, some extraordinary people!'
for more information and latest campaign news see www.jubileedebtcampaign.org.uk