High interest rates and penalties mean that the poorest countries spend more on repaying debts to the richest countries than they receive in aid. Between 1970 and 2002, the poorest African countries received $294 billion in loans, paid back $298 billion in interest and principal, but still owed more than $200 billion.

We must cancel all debts to the poorest countries to stop this treadmill.

When poor governments no longer need to repay debt, they can spend more on what really matters: food, clean water, housing, health care, jobs, education, and building their economies.

Canada can take action at World Bank and International Monetary Fund:

• Promote the immediate and unconditional cancellation of 100% of the multilateral and bilateral debt owed by the poorest countries.

Ensure that debt cancellation has no strings attached, enabling developing countries to implement their own national plans to end poverty.

Debt FAQs

What is debt cancellation, who is in debt and why is it important?

Many of the poorest countries in the world are in billions of dollars of debt to international monetary institutions, like the IMF and World Bank, as well as to wealthy nations across the globe. High interest rates and late penalties have meant the nations that can least afford it are repaying their loans double and many times triple the original principle. For example, sub-Saharan African countries continue to pay approximately $12 billion a year on interest payments on their loans.

Wouldn’t that $12 billion dollars be better spent on areas such as education, health care and infrastructure, areas that would allow nations to invest in their people and in their future? We think so too.

Why should debt be cancelled?

African governments spend an average of $14 per person a year on debt service and just $5 per capita on health care. With the cancellation of debt, countries can spend that $14 per person on health care, education and other such areas as they see fit. Countries can concentrate on improving the conditions for their citizens rather than scramble to pay the interest on their debts.

What will ensure that the money doesn’t disappear into the pockets of corrupt leaders?

Increasingly we see countries with active civil societies that can hold their governments accountable. Withholding debt cancellation will only penalize ordinary people, not the corrupt leaders. Turning our backs on the people of badly run countries can only make matters worse. It is our responsibility to support the efforts of people’s movements towards greater democracy, respect for human rights and transparency that will ensure that resources available from debt relief are used for genuine social development.