LATEST TWEET:
Spotted at the @DocsNotCops #patientsnotpassports protest- concern about the impact of NHS healthcare debt on patie… https://t.co/RFgCrS3QSc
Healthcare charges = healthcare debts. Today's new NHS charges are being resisted, follow #PatientsNotPassportshttps://t.co/JtCdrJbz7W
A hospital in Dumfries will earn £37.5m in interest for £24.2m in lending - at an interest rate of 11.3% https://t.co/CXDj0qDlVt
African-American students are four times more likely to default on their student loans than white peers https://t.co/xUrj8VteoG
Hidden debts contribute to crisis in Congo, after government revenue falls from $6.3bn in 2013 to $2.5bn in 2016 https://t.co/ef5nTn6IIi
Join the movement

Boom in lending to impoverished countries threatens ‘Greece style’ debt crisis

Figures calculated by the Jubilee Debt Campaign, based on recently released data from the World Bank, show that loans to impoverished country governments have increased by 40% in just one year, and have almost tripled since the global financial crisis began in 2008.

Lending to ‘low income countries’ increased to $17.3 billion in 2013, the latest year with figures available, up from $12.2 billion in 2012 and $6.1 billion in 2008. Of the loans since the global financial crisis began, 63% are from multilateral institutions, primarily the World Bank and International Monetary Fund, 27% from governments such as China, Japan, France and Germany, and 10% from private lenders.

Tim Jones, economist at the Jubilee Debt Campaign, said:

“The current boom in lending is being fueled by donors giving more ‘aid’ as loans rather than grants, and low interest rates in the US and Europe leading to speculation on developing country debts. A ‘Greece style’ debt crisis could be just around the corner unless action is taken to increase government revenues through tackling tax avoidance and evasion, and measures introduced to signal that reckless lenders will no longer be bailed out.”

Loans to the most impoverished countries governments have trebled since the global financial crisis began in 2008

Loans to the most impoverished countries governments have trebled since the global financial crisis began in 2008

Previous research by the Jubilee Debt Campaign has shown that two-thirds of impoverished countries face large increases in the share of government income spent on debt payments over the next ten years. On average, current lending levels will lead to increases of between 85% and 250% in the share of income spent on debt payments, depending on whether economies grow rapidly, or are impacted by economic shocks. The new increase in lending will only heighten concerns about the possibility of future debt crises.

One of the first countries to be entering a new debt crisis is Ghana. Two weeks ago, IMF staff reached an agreement to lend $310 million a year over 3 years to Ghana, in order to bailout previous lenders. This money will be used exclusively to meet debt payments to other foreign lenders to the West African country, which equal $1.2 billion to $1.6 billion a year over 2015 to 2017 (16-19% of government revenue).

In September 2014, the United Nations passed a resolution to begin negotiations on creating a ‘bankruptcy’ process for governments. Such a mechanism would indicate that reckless lenders would no longer be bailed out by the IMF and other public institutions, as is happening in Ghana and has happened in Greece. Campaigners warn that these bailouts of lenders incentivises them to continue lending recklessly, whilst leaving large debts with the country concerned. Just 11 countries voted against the UN negotiations taking place, but this included the UK, US, Germany and Japan. The next negotiating session at the UN will take place on 28-30 April 2015.


Countries

Ghana
Jubilee Debt Campaign is a company limited by guarantee, number 3201959
Jubilee Debt Campaign's registered charity number is 1055675