Water and Debt
In many of the poorest countries, the provision of decent, accessible public services –delivered by a qualified and properly paid workforce – is threatened by huge debt burdens and damaging policies demanded by creditors.
Every day 4,000 children die from diarrhoea, a disease of dirty water, and 1,400 women die in pregnancy or childbirth. In developing countries, public services can mean the difference between life and death.
The debt crisis has its origins in the 1970s and 1980s, when rich governments and companies lent huge sums to developing countries, often knowingly to corrupt regimes and to serve their own political or commercial ends.
Whilst there have been major steps forward in cancelling debt, in response to campaigner pressure, the rich world has still not taken full responsibility for these‘illegitimate’ debts and the ensuing debt crisis. On the contrary, as debt burdens grew over the last 30 years, creditors told impoverished countries to cut their public spending in order to ‘balance the books’ and keep up with debt payments.
Today, debt drains poor countries of resources that could otherwise be spent on vital public services. Where debt has been cancelled, countries have invested in public services, extending healthcare, education, water, sanitation and electricity to millions more people:
The poorest countries - those with an average daily income of $2.40 per person -spend over $100 million per day servicing debts, while public services in those countries are disastrously under-funded. Kenya spent more on servicing debt than on healthcare in 2006 - 2007. In 2004, Burundi spent more than twice as much on paying debts as on health and education combined.
Yet the need for increased investment in public services is urgent - over a billion have no access to clean water; 11 million children die each year from infectious diseases; 500,000 mothers die each year from pregnancy and birth-related problems; 40 million are living with HIV or AIDS; and 80 million children are not going to school at all (and of those who are, millions more suffer from a severe shortage of teachers and facilities).
Furthermore, the problem is compounded by the conditions creditor countries too often place on debt relief or on new loans.
One of these conditions is privatisation: many countries have been required to privatise state enterprises, such as water or power, often with disastrous results.
Other conditions have included cuts or freezes in pay for public sector workers, often leaving them effectively living below the poverty line, and driving them to find work in other sectors or other countries.
Debt relief works... When debts are cancelled, the impact on public services has been very positive. Repeated studies have shown significant increases in public sector spending after debt relief; one independent study showed a 40% increase in education spending, and a 70% increase in health spending, over just four years.
Key questions for research
How can debt be restructured to allow LEDCs to develop?
Do you profit from poverty OR What are the effects of debt repayments on your country?
Jubilee Debt Campaign report on the gobal downturn and its effect on indebted countries
'Getting into debt' a great visual guide from the Jubilee Debt Campaign