Financial debt is money borrowed that must be repaid, usually with interest, by individuals, companies and countries. The current global financial system is based on the lending and borrowing of money at every level of society, usually in ways that benefit the wealthy.
Debt can be used as a tool by which the rich can exploit the poor. We have seen a pattern recur throughout history to the present day. Lenders and borrowers should have shared responsibility to ensure that debts are contracted and spent fairly and responsibly. But all too often, lenders shirk their responsibilities and exploit those who need to borrow.
How does national debt work?
National debt is debt owed by governments. It can be owed to people and companies in the same country as the government – known as domestic debt – or to institutions and companies in other countries – known as external debt.
Debt can be useful for governments to invest in ways which help society, or to manage temporary problems. But when debt payments get too large they can lead to governments making drastic cuts in vital services, such as healthcare or education. It can also hand power to creditors to force governments to impose harmful economic policies, such as austerity..
Domestic debts tend to be easier to manage. External debts often cause more problems as they lead to money leaving the country. Paying external debts therefore can lead to worse impacts on the economy of a country.
External debts also tend to be owed to powerful countries and institutions such as the International Monetary Fund (IMF), World Bank or global banks, financial companies and oil traders. These institutions use debts to impose policies on the debtor country.
Formerly colonised countries tend to be more dependent on external debts. This is because colonisers made their economies dependent on exporting raw materials, and importing processed goods. Despite countries gaining independence, external debt has continued to be a way powerful countries and institutions have held power over former colonies.
Debt cancellation and reducing the reliance on external debt is needed to give countries greater ability to meet the needs of their people, and to help bring legacies of colonialism to an end.
What is the debt justice movement?
Debt Justice is a part of a global movement to end unjust debt and the poverty and inequality it perpetuates. Only together can we build a fair economy that serves people and the planet.
We are a UK based charity founded in 1996.
Our work is inspired by the ancient concept of the Jubilee, a periodic resetting of debts, and everything it represents – debt cancellation, celebration, hope, restoration, redistribution and justice. We believe no-one should be forced into debt just to put food on the table or pay for essential healthcare. And yet that’s the reality for many countries across the world, and households here in the UK.
Through informed and courageous campaigning, we build collective power with those affected so together we can rewrite the rules of global finance and build a fair economy for all.
We also support the movements that connect with our cause — from tax justice and climate justice globally, to stronger rights here in the UK for labour, wages, housing, and migration.