How much debt do the poorest countries owe?
All developing countries together owe US$3,400 Billion.(2007)

Aren't all countries in debt?
Yes, but there is a huge difference between the large national debt of a country like the US or the UK, which can be managed within its annual budget, and the debt of a country such as Malawi or Bangladesh, the servicing of which has a massive and crippling impact on basic public services such as health-care and education. This is what we mean when we talk about 'unpayable debt'. For a good visual demonstraion of this see Jubilee Australia's 'debt map'.

Where did the debt come from?
Much of today's unpayable debt originated in the 1970s, when skyrocketing oil prices led to a flood of so called 'petrodollars' into the world's banks, dollars that those banks became desparate to lend. In this heated atmosphere loans were made for projects which could never be any use: from steelworks in countries that had no iron ore to nuclear power plants on dangerous geological fault-lines. Worse, many of these loans were made in the full knowledge that they would be embezzled into the accounts of dictators, or even used by them for the weaponry they used to cement their vile regimes.

But I thought that the issue had been solved by the G8 in 2005?
It is true that there have been three main waves of debt-cancellation by the rich countries, cancellations which have led to improvements in the lives of millions of people. But none of these have been adequate for dealing finally with the issue of poor-country debt.

In the mid 1990s after world-wide pressure from campaigners the rich nations implemented the Heavily Indebted Poor Country Initiative (HIPC) which was designed to provide a "lasting exit from debt problems". This was enhanced by HIPC 2 in 1999 at the height of the Jubilee 2000 movement, and then again at Gleneagles in 2005 when the G8  pledged also to cancel the poor-country debt that was owed to multilateral institutions like the World Bank and International Monetary Fund (hence the title of this programme – Multilateral Debt Relief Initiative, or MDRI).

But the issue has still not been tackled comprehensively, for the following reasons:

Existing debt cancellation has been available only to a select few countries
The definition of a Heavily Indebted Poor Country is very narrow, and uses a 'one size fits all' definition based on the ratio of exports to debt repayments that excludes countries like Ecuador, Bangladesh and Nigeria, all of which are crippled by unpayable debt.

Existing debt cancellation has not acknowledged creditor co-responsibility
These programmes have been described in terms of 'forgiveness,' and have not included any mention of the bad lending of the past, or cancellation on the basis of illegitimacy. This means that there is no precedent to prevent more bad loans being generated in the future. The only debt-cancellation that ever acknowledged the illegitimacy of lending was that conducted by Norway in 2006, but this was outside the HIPC process.

Existing debt cancellation has had many strings attached
In order to qualify for debt relief poor countries have to comply with a number of far-reaching conditions, which usually have the effect of weakening and exposing that country's economy. Typical conditionalities may include the privatisation of state enterprise and the lowering of trade barriers, all of which leave the country's economy terribly exposed to powerful foreign competition. Moreover, by dictating economic policy to these countries the World Bank and International Monetary fund undermine a country's sovereignty, making it even harder for it to lift itself out of poverty.

These were one off cancellations, which did not leave in place any lasting mechanisms for dealing with debt
Countries that have been through the HIPC process still run the risk of going back into debt, and if they do, no mechanism exists for assessing whether that debt is payable or even legitimate.

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