Millennium Development Goals

The Failure of the Debt System

10 October 2013 by Eric Toussaint , Daniel Munevar

As the World Bank and the International Monetary Fund hold their annual meeting in Washington 11-13th October 2013 it is necessary to take a look at the state of the Millennium Development Goals (MDG). [1] The history of economic development is strewn with attempts to correct the “mistakes” of development policy. The preferred method is to add new elements to the agenda. This approach has led to adding an ever increasing number of issues, from environmental concerns to social policies, into the policy discussions.

The results of this practice are clear to see: of the original 8 Millennium Development Goals, only 2 have been met, with serious doubts regarding the possibility of meeting the other 6. The track record of the current development agenda is very disappointing [2].

So, the issue is not to add new elements to the framework, but to assess if the elements that are already present are working, and if they are not, can they be eliminated. The one element that stands out on that regard is Debt, as an economic, social and political development policy tool.

Since the implementation of the Marshall Plan Marshall Plan A programme of economic reconstruction proposed in 1947 by the US State Secretary, George C. Marshall. With a budget of 12.5 billion dollars (more than 80 billion dollars in current terms) composed of donations and long-term loans, the Marshall Plan enabled 16 countries (notably France, the UK, Italy and the Scandinavian countries) to finance their reconstruction after the Second World War. in Europe, policy circles have been burdened with the notion that injections of capital and fresh financial resources constitute one of the basic components of development. Based on this premise, the World Bank World Bank
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

has tried throughout the last 69 years to help countries to borrow their way into development. In many cases, the living conditions of hundreds of millions of people in the World have been degraded as a result of the debt based policies forced on them by the World Bank and the IMF IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.
with the complicity of their own governments [3].

Daniel Munevar

Instead of providing developing countries with fresh resources, the debt system has forced them to give priority to payments to creditors over the provision of basic social services. According to World Bank data, in 2010 alone, developing countries paid out $184 billion on debt service Debt service The sum of the interests and the amortization of the capital borrowed. , about three times the annual resources required for the fulfillment of the MDGs. Even more troublesome, between 1985 and 2010 net public debt flows to developing countries, that is the difference between debt inflows and debt payments, have reached -$530 billion [4]. To place this number in context, this is the equivalent of five Marshall Plans.

Throughout this time, debt has been used by the IFI´s and creditor countries alike to push developing countries to adopt policies that, if anything, prevent them from securing minimum living conditions for their populations. From the privatization and downsizing of public services, to opening internal markets to imports which has seriously undermined food sovereignty, the policies enforced upon developing countries have crippled their capacity to achieve their own internal development.

Eric Toussaint

Therefore, if something needs to be done, it is to cancel the public debts of developing countries. Contrary to what skeptics say, this debt represents no more than a drop in the bucket: in 2010, it reached $1.6 trillion (total public external debt), or less than 5% of the resources devoted by the US Government to bail-out the banks [5]. If such a massive amount of resources can be marshaled to secure the bonuses of banking executives, is it too much to ask to ask for a small 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 those same resources to secure better living conditions for hundreds of millions of people around the world? Clearly this is a political question, rather than an economic one, debt continues to be the major obstacle to development.

As CADTM has advocated during the last 24 years, let’s be rid of it.

Translated by Mike Krolikowski and Charles La Via

Daniel Munevar, economist, CADTM Colombia, and Eric Toussaint, Doctor in Political sciences, Senior Lecturer at the University of Liège, is the President of CADTM Belgium (Committee for the Abolition of Third-World Debt, ), and a member of the Scientific Committee of ATTAC France.


[1For a critical analysis of the MDG, see Damien Millet and Eric Toussaint, “Debt, the IMF and the World Bank, sixty questions, sixty answers”, Monthly review press, New York, 2010, Q4 : What are the Millenium Developpement Goals(MDG)? p.27

[2“Millennium development goals – the key datasets you need to know”, available at:

[3Eric Toussaint, The World Bank: A Critical Primer, Pluto Press, London, 2008, available at: See also: Eric Toussaint, doctoral thesis in political science, presented in 2004 at the Universities of Liège and Paris VIII: “Enjeux politiques de l’action de la Banque mondiale et du Fonds monétaire international envers le tiers-monde” (“Political aspects of the World Bank and the International Monetary Fund actions toward the Third World”), French only)

[4See Damien Millet, Daniel Munevar, Eric Toussaint, “2012 World Debt Figures”, available at:

[5Calculated on the basis of the costs analysis undertaken by the Levy Institute, which estimates the total cost at $29 trillion. See, Felkerson, J. (2011), “$29,000,000,000,000: A Detailed Look at the Fed’s Bailout by Funding Facility and Recipient”, Levy Institute Working Paper 698.

Eric Toussaint

is a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège, is the spokesperson of the CADTM International, and sits on the Scientific Council of ATTAC France.
He is the author of Greece 2015: there was an alternative. London: Resistance Books / IIRE / CADTM, 2020 , Debt System (Haymarket books, Chicago, 2019), Bankocracy (2015); The Life and Crimes of an Exemplary Man (2014); Glance in the Rear View Mirror. Neoliberal Ideology From its Origins to the Present, Haymarket books, Chicago, 2012, etc.
See his bibliography:
He co-authored World debt figures 2015 with Pierre Gottiniaux, Daniel Munevar and Antonio Sanabria (2015); and with Damien Millet Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. He was the scientific coordinator of the Greek Truth Commission on Public Debt from April 2015 to November 2015.

Other articles in English by Eric Toussaint (639)

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Daniel Munevar

is a post-Keynesian economist from Bogotá, Colombia. From March to July 2015, he worked as an assistant to former Greek Finance Minister Yanis Varoufakis, advising him on fiscal policy and debt sustainability.
Previously, he was an advisor to the Colombian Ministry of Finance. He has also worked at UNCTAD.
He is one of the leading figures in the study of public debt at the international level. He is a researcher at Eurodad.



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