World Debt

 

 

World debt has become a critical issue for developed and developing nations alike ever since the financial crisis hit the US in 2007 and 2008. While talking on the World Debt Day on May 16, 2009, the Minister for International Development, Mike Foster made a significant statement by stating, “World Debt Day is an important reminder of the need for countries to work together to lift the burden that debt places on the world’s poor.”[br]

World Debt: National Statistics

Most countries have debts to pay off, so they have to divert a large part of their financial resources towards interest payments. The extent of debt owned by each country to external sources as of December 31, 2008 is as follows:

 

Country	Debt External
United States	$13,640 billion
United Kingdom	$9,170 billion
Germany	$5,250 billion
France	$5,002 billion
Netherlands	$2,470 billion
Italy	$2,328 billion
Spain	$2,313 billion
Ireland	$2,312 billion
Japan	$2,231 billion
Luxembourg	$1,933 billion

 

World Debt: Third World Countries

Based on poverty levels, the third world countries comprise a group of countries that are identified by the United Nations as the “least developed” based on following criteria:

• A low-income estimate of the gross national income (GNI) per capita

• Their weak human assets

• Their high degree of economic vulnerability

 

Some of the third world countries with their debt liabilities are:[br]

 

Country	Debt External	Date of Information
Angola	$7,617 million	2008 estimates
Cape Verde	$325 million	2002 estimates
Ethiopia	$3,161 million	2008 estimates
Lesotho	$619 million	2008 estimates
Mali	$2,800 million	2002 estimates
Rwanda	$1,400 million	2004 estimates
Somalia	$3 billion	2001 estimates
Uganda	$1718 million	2008 estimates
Maldives	$477 million	2008 estimates
Bangladesh	$4266 million	2008 estimates

 

According to the Jubilee 2000 report, a poor or developing nation has to pay $1 of interest for every $1 in aid for its project from developed countries. In some cases, as much as $3 was extracted for a loan of $1. Also, spending on health and education actually dipped in some of the world’s poorest nations during the 1980s till the 1990s.

 

To resolve this problem, the debt swap program was started. A development agency bought the debt of a poor nation for a specific sum, in case the country agreed to spend the same amount on its development.

 

Likewise, the governments of several developed countries have continued their endeavor to help poor countries by providing debt relief and cancelling their debts.