international southern debt. aim to understand that debt has an impact on governments’ ability to...
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International Southern Debt
AimTo understand •that debt has an impact on governments’ ability to improve the lives of their peoplesTo become familiar with:• how debt can effect the lives of families and individuals•some of the causes, and solutions to debt and the benefits of debt relief•the contribution ordinary people in Europe can make to debt relief
Senegal facts• Poverty: 50 % people live on less than $ 1/ day
• Disease: Malaria 50% people at risk
• Education: 1999 55% primary school enrolmnt 2009 75% primary school enrolmnt
• Child mortality: 1990 :139 deaths/1000 2010: 75 deaths/1000
• Debt: 1990 18.3% National income 2009 3.7% “”””””” “””””
Why and how do governments borrow money?
• Bonds• International Financial Institutions
(IMF, World Bank)
Can you name some things which governments spend money on?
Click for a clueEducation
Defence
Healthcare
Culture and the arts
Transport infrastructure
Emergency services
Research
Energy
Why are developing countries in debt?
There are three main causes of debt in developing countries:
Colonialism• Debts transferred to newly formed
governments
GBP 28 billion
The 1973 oil crises
• interest rates shot up
• Price for raw commodities fell
• government debt spiralled
Corrupt leadersMoney was knowingly lent to unaccountable and corrupt leaders …
… who became rich while their people received no benefits from the loan
High interest ratesDespite paying huge amounts back, governments cannot pay back the capital of their debts.
Nigeria …
Borrowed Repaid Still owes
$17 billion$18 billion
$34 billion
Why is it hard to get out of debt?
It is difficult for countries to get out of debt because:
Low commodity prices
Falling prices in the 1980s
Lack of investment
Spending money servicing debts means governments cannot make their economies more productive by investing in infrastructure and people.
Has anything been done to relieve debt?
What have governments done?The HIPC (Heavily Indebted Poor Countries) Initiative was launched by the IMF and World Bank in 1996. •$55 billion for 32 countries•$45 billion Multilateral Debt Relief Initiative •2005 Make Poverty History campaign.
Has the problem been solved?
Poor countries are still paying back illegitimate debt and are made to accept repayment conditions which adversely affect the poorest.
In 2008,How much debt was paid by ‘developing’ countries?
$3.7 trillion$602 billion
How much debt was still owed by developing countries?
Education Agriculture Health
Malawi and the HIPC