Bondholders could make $30 billion profit by refusing to cancel debts

  • Campaigners call for UK to legislate to make finance giants take part in debt relief
  • UK Parliament International Development Select Committee has called for new legislation

The big finance firms that own the debts of five countries in a debt crisis are set to collectively make $20-$30 billion of profit if they refuse to cancel debt payments and instead are paid in full, according to new research by Debt Justice.[1]

The calculations are based on the current market price of debts of Ethiopia, Ghana, Sri Lanka, Suriname and Zambia. These five countries are trying to negotiate a reduction in their debts, but none have yet been successful. Ethiopia, Suriname and Zambia have been negotiating with their creditors for over two years, Sri Lanka for one year and Ghana since the end of 2022.

In March, the UK Parliament’s International Development Select Committee called on the UK government to “consult on the introduction of legislation to compel or incentivise participation of private creditors in the Common Framework [the G20’s debt relief scheme]”.[2] British charities Cafod, Debt Justice, Christian Aid, Oxfam, Debt Justice, Global Justice Now, Action for Southern Africa (ACTSA), Save the Children, Tearfund and Jubilee Scotland are backing these calls and calling on the UK government to consult on legislation to make private lenders take part in international debt relief initiatives.

“Private lenders are having their cake and eating it. They’ve already profited from charging premium interest rates to cover their risk and now that countries cannot afford to pay, they also want to profit from full payment. With essential public services at stake, like healthcare and education and fighting the climate emergency, lenders must be forced to negotiate debt cancellation and new legislation can do just that.”

Heidi Chow, Executive Director of Debt Justice

“Debt is impacting on the livelihood of many poor Ghanaians. Escalated food prices and the high cost of some basic social services are sending many Ghanaians back into poverty. We urgently need debt cancellation from foreign lenders to tackle our economic crisis. The UK has the power to make private lenders take part in debt relief. We urgently need them to do so.”

Bernard Anaba from the Integrated Social Development Centre in Ghana

“It is shameful that banks and investors are refusing to cancel debts, further deepening the global debt crisis which is forcing countries to choose between paying for schools and hospitals or face being sued. We’re beyond the point of waiting for these cowboy lenders to take part in debt relief when they feel like it. It’s time for the government to introduce and approve legislation to put an end to irresponsible banks continuing to profiteer during a global debt crisis”

Dario Kenner, Economic Justice lead at CAFOD

The figures show that if bondholders are paid in full, they would collectively make $30 billion of profit, compared to the current market price of the bonds. Alternatively, if the bondholders bought the bonds when they were first issued, and they are paid in full, they would make $20 billion profit, due to the high interest rates charged.

In 2010, the UK passed the Debt Relief (Developing Countries) Act, which prevented creditors from demanding more than they would have got under the Heavily Indebted Poor Countries debt relief scheme. One option for UK legislation is to update the 2010 Act to apply to current international debt relief initiatives. Similar efforts are underway in the New York Assembly.[3] Of the five countries foreign currency bonds, 57% are governed by English law, 43% by New York law.[1]

In 2022, Ghana spent three times more on external debt payments than it did on health care.[4]Debt Justice estimates that cancelling Ghana’s debt to a sustainable level could free up enough money to increase spending on health, education and climate by 50%.[5]

The ownership of bonds is very untransparent. Debt Justice has managed to identify the owners of around one-third of the bonds of the five countries in the research. The largest known individual bondholder is BlackRock, which owns at least $2.1 billion of the $30.4 billion owed by Ethiopia, Ghana, Sri Lanka, Suriname and Zambia.[1] While there is not enough data to assign potential profit figures to BlackRock across the five countries, previous Debt Justice research has estimated that BlackRock could make 110% profit from Zambia’s bonds for itself and its clients if paid in full.[6] BlackRock has previously refused to respond to Debt Justice’s request for comment on its potential profit from Zambia and has failed to respond to numerous communications.


[1] The full research is available at https://debtjustice.org.uk/wp-content/uploads/2023/04/Bond-profit_Media-briefing_04.23.pdf

[2] https://publications.parliament.uk/pa/cm5803/cmselect/cmintdev/146/report.html recommendation 10

[3] See https://www.nysenate.gov/legislation/bills/2023/s4747#:~:text=The%20bill%20will%20protect%20taxpayers,most%20vulnerable%20in%20debtor%20countries.

[4] In 2022 Ghana spent GHc11 billion on healthcare ($0.9 billion) https://mofep.gov.gh/sites/default/files/budget-statements/2022_Budget_Statement_v3.pdf

In contrast, in 2022 Ghana spent $3 billion on external debt payments (World Bank International Debt Statistics database).

[5] Ghana’s spending on health in 2022 was GHc11 billion ($0.9 billion) and on education GHc17.8 billion ($1.4 billion). https://mofep.gov.gh/sites/default/files/budget-statements/2022_Budget_Statement_v3.pdf

Ghana is spending less than $100 million a year on adapting to climate change (https://debtjustice.org.uk/press-release/lower-income-countries-spend-five-times-more-on-debt-than-dealing-with-climate-change)

Together this is currently $2.4 billion a year being spent on healthcare, education and climate change adaptation.

If Ghana’s debt payments were cut to a sustainable level, it would save at least $2.1 billion a year (Calculated by Debt Justice based on the IMF’s threshold for sustainability of 15% of government revenue.) However, in reality Ghana does not have enough money to meet the debt repayments, so not all the debt payments cancelled could be spent elsewhere. If just over half of these savings were able to be spent, this would be enough to increase spending on healthcare, education and climate change adaptation by 50%. This is an illustration of the size of debt payments and debt relief, rather than an expectation that the savings would only be spent in these areas and no others.

[6] https://debtjustice.org.uk/press-release/blackrock-could-make-110-profit-out-of-zambias-debt-crisis

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