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MPs are wrong to call for more aid to be ‘given’ as loans

Jubilee Debt Campaign has criticised calls by the International Development Select Committee for more UK aid to be given as loans between now and 2030.

Commenting on the report, Jubilee Debt Campaign Director Sarah-Jayne Clifton said:

“There is already a boom in lending to developing countries, threatening to once again create debt crises which increase poverty and inequality. Loans allow governments to fiddle-the-figures on how much ‘aid’ they give and leave behind a trail of destruction through debt crises as seen on all continents in the last three decades. The UK should not contribute to boom-bust cycles by giving more aid as loans.”

The International Development Committee report calls for UK aid programmes to shift away from grants and towards a system of loans and other financial instruments. In more detail, it calls for grant funding to lower middle income countries (those with an annual income per person of £650 to £2,600 a year) to be substantially replaced by loans and other financial instruments. It also calls for more lending to be considered for investments in low income countries (those with an annual income per person of less than £650 a year).

The UK government already gives a significant proportion of its ‘aid’ money as loans, via contributions to multilateral institutions such as the World Bank, which are then used as loans. In 2012, Jubilee Debt Campaign calculated that $1.26 billion of UK aid was given as loans via multilateral institutions.(1)

Foreign lending to sub-Saharan African governments has increased by 130% in six years, from $9.9 billion in 2006 to $23.4 billion in 2012.(2)

Ghana is one lower middle income DfID priority country. The Ghanaian government’s payments on foreign debt are predicted to reach a gigantic 20 per cent of government revenue in the next decade. 74% of Ghana’s foreign debt is owed to other governments and multilateral institutions, primarily the World Bank, African Development Bank and IMF.(3)

Pakistan is another lower middle income DfID priority country. The Pakistan government is currently spending over 20 per cent of government revenue on foreign debt payments. The Pakistan government has been in a foreign debt crisis for four decades, borrowing supposedly ‘temporary’ IMF loans in 30 of the last 40 years. 94% of Pakistan’s foreign debt is owed to other governments and multilateral institutions, primarily the World Bank, Asian Development Bank, IMF and Japanese government.(4)

In Africa in the 1980s and 1990s, the number of people living in extreme poverty (on less than $1.25 a day) increased from 205 million to 330 million as a result of debt payments and economic crisis, low global commodity prices and damaging austerity and liberalisation imposed by the IMF and World Bank.(5)

Following campaigning by the global Jubilee movement for an end to debt payments, $130 billion of debt was cancelled for 35 countries, primarily in sub-Saharan Africa, between 2000 and 2012.

For more detail, comment and to arrange interviews, contact Tim Jones on 07855 939 998

1. See Jubilee Debt Campaign’s report, The State of Debt: Putting an end to 30 years of crisis.

2. World Bank. World Development Indicators.

3. IMF, 2013 Article IV consultation with Ghana, and Bank of Ghana Statistical Bulletin

4. World Bank. World Development Indicators.

5. See Jubilee Debt Campaign’s report, The State of Debt: Putting an end to 30 years of crisis.


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