Debt and poverty
On average, debt payments cost many poor countries almost twice what they spend on education and more than three times the amount spent on the population's healthcare. Poor people suffer from a lack of government investment in the country, such as better roads which would help them travel to market. It is the poorest people who are unable to afford to start paying for schools when fees are introduced, so their children miss out. When the prices of basic foods go up, it is the poorest people who can no longer afford to feed their families.
Some people claim debt cancellation would just allow corrupt leaders to have more money for themselves, rather than benefitting the poorest people. However there is ample evidence to show that debt cancellation is an effective way to get money where it is needed. Some countries (e.g. Tanzania and Uganda) have set up separate funds to channel money freed by debt relief towards poverty reduction. These are some examples of how debt relief have benefited people in need:
- In Benin, 54% of the money saved through debt relief has been spent on health, including on rural primary health care and HIV programmes.
- In Tanzania, debt relief enabled the government to abolish primary school fees, leading to a 66% increase in attendance.
- After Mozambique was granted debt relief, it was able to offer all children free immunisation.
- In Uganda, debt relief led to 2.2 million people gaining access to water.