UK development strategy will intensify debt crisis in lower income countries

Commenting on today’s launch of the UK government’s International Development Strategy, Heidi Chow, Executive Director of Debt Justice said:

“Many lower income countries are already in a full-blown debt crisis, the last thing they need is more loans. A true development strategy would be for the UK to help cancel the huge debts owed to British banks, hedge funds and oil traders, as well as debts owed under English law. Piling on more debt is incredibly callous and makes no sense.”

Lower income country debt payments have increased 120% between 2010 and 2021 and are higher than at any point since 2001. Average government external debt payments were 14.3% of government revenue in 2021, up from 6.8% in 2010. Payments shot up in 2020 and have remained high in 2021.[1]

In 2022, of external debt payments due to be paid by low and lower middle-income governments, 47% are to private lenders, 27% multilateral institutions, 12% China and 14% governments other than China.[2] Of debts owed to private lenders by low and lower middle income country governments, 51% are governed by English law, and 49% by New York law.[3]

IMF Managing Director Kristalina Georgieva has called on the UK and US to pass legislation to stop private lenders blocking debt relief agreements.[4]


[1] https://debtjustice.org.uk/press-release/growing-debt-crisis-to-worsen-with-interest-rate-rises

[2] Calculated by Debt Justice from World Bank International Debt Statistics database.

[3] The figure is for bonds as these are the ones with public information on governing law. Calculation is at https://debtjustice.org.uk/wp-content/uploads/2022/05/G7-responsibility-for-debt-payments_Briefing_05.22-1.pdf

[4] “We also are pressing for some of the changes, legal changes that need to happen in New York, in London, to close loopholes for vulture funds and others to prevent debt resolution. We are discussing how we can bring more contingency measures in debt agreements, how to press for more debt transparency.” https://www.imf.org/en/News/Articles/2022/04/21/tr220421-transcript-of-the-imfc-press-briefing

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