Debt and Public Services

In developing countries, the provision of decent, accessible public services can mean the difference between life and death, yet these services are threatened by huge debt burdens and the damaging policies demanded by creditors.

Although the debt crisis has its origins in the 1970s and the 1980s, today's populations are those that are suffering. As debt burdens grew over the past 30 years, impoverished countries were often told to cut their public spending in order to 'balance the books' and keep up with debt payments. Debts continue to drain poor countries of resources that could be spent on vital public services.

Download the detailed briefing on debt and public services, and the accompanying PowerPoint presentation, using the links on the right.

The briefing, produced jointly with Oxfam and UNISON, shows how 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. For example:

• 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 even in other countries.

Debt relief works
The news is not all bad: 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. Local monitoring and strong union and civil society demands for investment in public services has seen investment in, for instance:

• Providing medicine and educational materials in Nicaragua
• Generating energy in Rwanda and Tanzania
• Building water systems in Guyana and Mali
• Giving more than 5000 community teachers in Mali a monthly stipend.

We are calling for governments to uphold the commitments they have made and ensure that agreements concerning loans, debt and debt cancellation do not violate people's rights. Rich countries must immediately cancel all illegitimate and unpayable poor country debt, without imposing conditions from outside.

Debt and Public Services presentation - can be used in conjunction with the briefing or independently; slides may be omitted if a shorter presentation is required.
Includes speaker notes.