Don’t turn the clock back: Analysing the risks of the lending boom to impoverished countries

14 October 2014 by Jubilee Debt Campaign

There is currently a boom in lending to impoverished countries. External loans to low income countries increased by 75% between 2008 and 2012. Lending to sub-Saharan African countries doubled over the same time period. This research uses projections of debt payments over the next decade to analyse the risk of debt payments undermining the ability of governments to meet basic needs and public services.

It finds that two-thirds of impoverished countries face large increases in the share Share A unit of ownership interest in a corporation or financial asset, representing one part of the total capital stock. Its owner (a shareholder) is entitled to receive an equal distribution of any profits distributed (a dividend) and to attend shareholder meetings. of government income spent on debt payments over the next ten years. On average, current lending levels will lead to increases of between 85% and 250% in the share of income spent on debt payments, depending on whether economies grow rapidly, or are impacted by economic shocks. Even if high growth rates are achieved, a quarter of impoverished countries would still see the share of government income spent on debt payments increase rapidly.

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