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Lower-income countries have been forced to pay out $2.7 trillion in interest payments to creditors since 1970, according to new a new report by Debt Justice [1].
Western creditors have received the vast majority (82%) of these interest payments, making returns of $2.2 trillion. China received $60 billion in interest over the same period, and other non-western creditors received $428 billion.
Many lower-income countries have been paying high interest rates on loans since independence from colonial powers. These high interest rates represent lucrative returns for creditors, which include banks, bondholders, multilateral agencies and governments.
Tess Woolfenden, Senior Policy Officer at Debt Justice, said:
“The billions of dollars spent on interest payments on debt by global south countries could otherwise be spent on healthcare, education or responding to the climate emergency. Western governments, corporations and institutions are using debt to maintain their power and extract resources from global south countries, just as they did during colonial occupation. This is neo-colonialism. We urgently need to put an end to unjust debt, including through large-scale debt cancellation.”
54 countries are currently in debt crisis, while many more are facing high debt burdens [2]. Private creditors like BlackRock could make huge profits from global south debt if they are repaid in full [3]. Private creditors have so far not engaged in adequate debt relief for lower income countries. Existing debt relief processes lack mechanisms to force private creditors to engage.
Precious Kalombwana, a member of Debt for Climate Zambia and Fridays for Future Zambia, said:
“The debt crisis in Zambia is severely affecting our communities. We can’t afford to eat three times a day, and we can’t afford to address the devastating impacts of the climate crisis affecting us. Instead of supporting Zambian people, the global north is allowing companies like BlackRock to profiteer from our debt. We need urgent debt cancellation so we can prioritise the needs of my people, not the profits of private companies.”
Notes
Debt Justice (formerly Jubilee Debt Campaign) is a UK charity working to end poverty caused by unjust debt through education, research and campaigning: https://debtjustice.org.uk/
[1] The report is available here: https://debtjustice.org.uk/wp-content/uploads/2023/09/The-colonial-roots-of-global-south-debt.pdf
[2] https://debtjustice.org.uk/press-release/growing-debt-crisis-to-worsen-with-interest-rate-rises
[3] 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, including BlackRock. https://debtjustice.org.uk/news/bondholders-could-make-30-billion-profit-by-refusing-to-cancel-debts
Full calculations are available in the briefing ‘Interest paid by low- and middle- income countries on sovereign external debt repayments from 1970-2023 ‘ available here: https://debtjustice.org.uk/wp-content/uploads/2023/09/Interest-paid-by-global-south-countries-on-sovereign-external-debt-repayments-from-1970-2023.pdf
Summary table:
| Creditor grouping | Interest paid by low- and middle- income countries between 1970-2023 | % of total interest payments between 1970-2023 |
| Western | 2,200,000,000,000 | 82% |
| Non-western, excluding China | 430,000,000,000 | 16% |
| China | 60,000,000,000 | 2% |
| TOTAL | 2,690,000,000,000 | 100% |
Calculations use debt repayment information available on the World Bank Debt Statistics Database.
From the database, we collected interest payments by low- and middle- income countries to all creditors between 1970 and 2023. We then categorised each creditor as ‘western’, ‘non-western excluding China’ and ‘China’.
For multilaterals where it was unclear, we allocated the category based on majority voting share.
We then calculated the total interest payments, total interest payments per creditor grouping, and the % of payments per creditor grouping.
Where it was unclear where to allocate a payment to a creditor (such as those labelled ‘Multiple Lenders’), we allocated it proportionately across all three categories.
The amounts paid represent the actual amounts at the time. If the amounts were calculated in today’s prices, the amounts paid in the past would be increasingly higher.
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