Debt Cancellation

The Challenge

Developing countries spent years repaying billions of dollars in loans, most of which had been accumulated under corrupt regimes during the Cold War and had collected interest. These debts undermined the ability of many countries to invest in their people and make progress fighting poverty, and many countries ended up spending more each year paying back old debts than they did on health and education combined. Wealthy countries and international financial institutions have taken action to cancel debts in many of the most impoverished countries, but there is still more to do to ensure these benefits are fully delivered, that other poor countries in need qualify, and that the countries that do benefit are not at risk of a future debt crisis.

The Opportunity

Beginning in 1996, wealthy countries took steps to cancel debts owed by the world's poorest countries. In total, nearly $110 billion worth of debt has been canceled, $93 billion of which was in sub-Saharan African countries. This relief has helped free up scarce resources for poor governments to invest in their people. Many African governments used their debt savings to eliminate primary school fees, which helped open school doors for millions of the poorest children. Other countries targeted their savings towards improving health services. Mozambique, for example, used its savings to vaccinate children against tetanus, whooping cough and diphtheria, while Cameroon used its savings to launch a national HIV/AIDS plan for education, testing and prevention.

To replicate these successes and protect them, wealthy countries need to fully deliver upon their financial commitments to cancel debts, extend debt relief to other poor countries in need, and take immediate steps to help countries avoid accumulating new debts.

Learn more, read the full Debt Cancellation Issue Brief...