2-3 Feb. 2002
The on-going debt crisis of developing countries is integral to the perpetuation of an unjust economic system, one that concentrates wealth and power in the hands of a few. EVERY SINGLE DAY in 1999, $128 million was transferred from the poorest countries to the richest in debt repayments. For every one dollar in aid to developing countries, more than seven dollars comes back to rich countries in the form of debt servicing. 
Almost three years after representatives of the Jubilee 2000 Debt Cancellation campaign presented 17 million petitions to the G-8 leaders in Cologne calling for debt cancellation, the plight of heavily indebted poor countries remains no better. In fact, a strong argument can be made that they are worse off.
At Cologne, the G-8 governments responded to the call for debt cancellation with immediate promises of debt relief to those countries covered by the Heavily Indebted Poor Countries (HIPC) initiative. More countries were to be made eligible for debt relief and some time and debt level restrictions would be relaxed. The IMF and World Bank introduced a new scheme, the Poverty Reduction Strategy Paper (PRSP) which each debtor country would write up to demonstrate how any debt relief received would go to help that country’s poor.
To many, all of this sounded just great – finally the debt burden would be lifted off of the backs of the world’s poor. The reception of PRSP’s was also positive. After all, who wants the rich to run off with the money and the poor to be left in the lurch? However, the response was far from unanimous and organizations such as the SJC denounced the whole scheme. Much of the debt relief - the so-called billions of dollars - is money that would not, and could not, be paid out by impoverished countries anyway. Structural Adjustment Programs (SAPs) still had to be rigidly followed and the new PRSPs, theoretically drawn up by the affected country, have to be judged acceptable by the IMF and World Bank staff and directors.
We must also note that neither the G-8 nor the IMF and World Bank have admitted to any responsibility whatsoever for the plight of these poor countries. Many of the lenders had acted irresponsibly if not criminally. Western governments armed and supported several dictatorships, if not actually placing them in power. The West raised interest rates to astronomical levels in the early 1980s, making repayment of debt impossible. IMF and World Bank programs pushed on the poor countries were often ill-conceived and damaging. All of these factors are conveniently glossed over and ignored by the creditor countries and institutions.
So, where does that leave us now? A quick glance at some of the world’s poorest countries - those where the word "poverty" is totally inadequate given the destitution and misery of so many people - demonstrates that they have not received any of the promised relief from the IMF and World Bank because they have failed to live up to the old SAPs. In particular, countries like Mali, Benin, Chad, Burkina Faso, Malawi, Nicaragua and Honduras (see below) have been too slow for the IMF’s liking in privatizing hydro-electric, telecommunications, and water systems, or haven’t cut back enough in public spending. As a result the debt relief they were to receive has been held back even though these countries are among the world’s poorest.
From the earliest days of the various Cancel the Debt campaigns we realized that the cancellation of debt by itself would not solve poor countries’ economic problems. It was always abundantly clear that a major change in global economic relationships was necessary. Yes, debt relief is imperative if poor countries are to have a chance but it must be accompanied by a more just economic system.
What has become more apparent ever since Cologne is that for the IMF, the countries that run it, and the corporations that benefit from it, collecting debts is only a secondary concern. What is more important is that countries remain indebted. Indeed, the stated purpose of the World Bank and IMF-run HIPC Initiative debt reduction process is to get impoverished countries to a level of "debt sustainability" in which they continue to make payments to the full extent possible given their economic situation. And so long as they remain indebted, the creditors, whether they be countries or institutions, can interfere in their internal operations. This indebtedness of most of the world’s nations has become a means by which the creditors can plunder their resources.
Under the mantra that the private sector is more efficient than the public, the IMF and World Bank are facilitating the complete takeover of the poor countries’ resources by the major corporations. In theory, privatization means simply changing control of companies and resources from the public to the private sector. In practice, this means turning control of a country’s economy over to foreign interests. When Honduras is told that it must privatize its telecommunications sector in order to get debt relief, it does not mean that Honduran corporations will now control Honduras’ telephones. No, it will be a conglomeration of foreign corporations that will reap the harvest. Ghana’s water supply is not being taken over by a Ghanaian company but rather by French ones.
Some day in the not-too-distant future, the IMF and its friends will start giving some debt relief to the poor. They will do it, not because of the goodness of their hearts but because the debt will have served its purpose and is no longer required. The indebted nations themselves will be little more than empty shells, their economic lifeblood sucked dry.
If this were not bad enough, there is another alarming development. Many of those organizations within the international development community that one would expect to be denouncing the IMF’s latest moves, seem to have been co-opted into playing games with the PRSP process. The ploy that the IMF and World Bank are successfully using is that these PRSPs are "democratic". The indebted countries themselves, their civil population and the international development community are all invited to have a say what form these PRSPs will take. Never mind that the main components of structural adjustment - like privatization, budget cuts and public spending - remain unaffected, out of the reach of public input. The IMF and World Bank continue to set the ground rules, and make the final decision as to what is acceptable or not.
Given another framework this might be laudable. In the present context, where the creditors continue to enforce a regime of SAPs, it is akin to fiddling while Rome burns or rearranging the deck chairs on the Titanic.
Twenty years have passed since the international "debt crisis" brought about by Mexico’s and Brazil’s threat to stop debt payments, mainly to private lenders. It is twenty years since the IMF and World Bank then came to the aid of the private banks and shoved their "structural adjustment" programs down the throats of the world’s poor. Twenty years of SAPs, HIPCs and PRSPs! And what do we have? More debt, privatization, a surfeit of coffee, bananas, cocoa and other "Third World" products available for peanuts and.... lots and lots of hungry people.
Meanwhile, the world looks on.
Produced By: The Social Justice Committee
 World Bank. Global Development Finance 2001, 1999 figures for 62 lowest income countries.
 World Bank Global Development Finance 2001, based on 1999 figures for grants and total debt service.