The Debt of Developing Countries: The Devastating Impacts of IMF-World Bank “Economic Medicine”
Millennium Development Goals The Failure of the Debt System
The results of this
practice are clear to see: of the original 8 Millennium Development
Goals, only 2 have been met, with serious doubts regarding the
possibility of meeting the other 6. The track record of the current
development agenda is very disappointing |2|.
So, the issue is not to add new elements to the framework, but to
assess if the elements that are already present are working, and if they
are not, can they be eliminated. The one element that stands out on
that regard is Debt, as an economic, social and political development
policy tool.
Since the implementation of
the Marshall Plan in Europe, policy circles have been burdened with the
notion that injections of capital and fresh financial resources
constitute one of the basic components of development. Based on this
premise, the World Bank has tried throughout the last 69 years to help
countries to borrow their way into development. In many cases, the
living conditions of hundreds of millions of people in the World have
been degraded as a result of the debt based policies forced on them by
the World Bank and the IMF with the complicity of their own
governments |3|.
Instead of providing
developing countries with fresh resources, the debt system has forced
them to give priority to payments to creditors over the provision of
basic social services. According to World Bank data, in 2010 alone,
developing countries paid out $184 billion on debt service, about three
times the annual resources required for the fulfillment of the MDGs.
Even more troublesome, between 1985 and 2010 net public debt flows to
developing countries, that is the difference between debt inflows and
debt payments, have reached -$530 billion |4|. To place this number in context, this is the equivalent of five Marshall Plans.
Throughout this time, debt
has been used by the IFI´s and creditor countries alike to push
developing countries to adopt policies that, if anything, prevent them
from securing minimum living conditions for their populations. From the
privatization and downsizing of public services, to opening internal
markets to imports which has seriously undermined food sovereignty, the
policies enforced upon developing countries have crippled their capacity
to achieve their own internal development.
- Eric Toussaint
Therefore, if something
needs to be done, it is to cancel the public debts of developing
countries. Contrary to what skeptics say, this debt represents no more
than a drop in the bucket: in 2010, it reached $1.6 trillion (total
public external debt), or less than 5% of the resources devoted by the
US Government to bail-out the banks |5|.
If such a massive amount of resources can be marshaled to secure the
bonuses of banking executives, is it too much to ask to ask for a small
share of those same resources to secure better living conditions for
hundreds of millions of people around the world? Clearly this is a
political question, rather than an economic one, debt continues to be
the major obstacle to development.
As CADTM has advocated during the last 24 years, let’s be rid of it.
|1| For a critical analysis of the MDG, see Damien Millet and Eric Toussaint, “Debt, the IMF and the World Bank, sixty questions, sixty answers”, Monthly review press, New York, 2010, Q4 : What are the Millenium Developpement Goals(MDG)? p.27
|2| “Millennium development goals – the key datasets you need to know”, available at: http://www.theguardian.com/global-d…
|3| Eric Toussaint, The World Bank: A Critical Primer, Pluto Press, London, 2008, available at: http://cadtm.org/The-World-Bank-A-c…
See also: Eric Toussaint, doctoral thesis in political science,
presented in 2004 at the Universities of Liège and Paris VIII: “Enjeux
politiques de l’action de la Banque mondiale et du Fonds monétaire
international envers le tiers-monde” (“Political aspects of the World
Bank and the International Monetary Fund actions toward the Third
World”), http://cadtm.org/Enjeux-politiques-… French only)
|4| See Damien Millet, Daniel Munevar, Eric Toussaint, “2012 World Debt Figures”, available at: http://cadtm.org/2012-World-debt-figures
|5|
Calculated on the basis of the costs analysis undertaken by the Levy
Institute, which estimates the total cost at $29 trillion. See,
Felkerson, J. (2011), “$29,000,000,000,000: A Detailed Look at the Fed’s
Bailout by Funding Facility and Recipient”, Levy Institute Working
Paper 698.
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