CAFOD has long campaigned against unjust debt. In fact, we helped make debt a mainstream issue in the 1990s with the global Jubilee 2000 movement which won debt cancellation for 36 lower income countries and reduced their total debt by three quarters. When debt is cancelled, the money saved by governments goes to improving public services and reducing poverty. This can include more children completing primary school, better healthcare, water supplies and food security.
Global debt is at a record high and the margin for error is dwindling. Despite an upturn in the global economy, weak growth and low initial debt levels are pushing debt-at-risk up across a broad range of developing economies. In addition, overlapping crises like the Covid-19 pandemic and rising trade tensions are adding to the strain.
Debt-to-income ratios have been soaring since the 2008-9 global financial crisis. This is largely because interest rates were ultra-low and many economists came to believe that they would remain so well into the future, making running government deficits seem like a free lunch.
But paying debts shouldn’t be prioritized over funding vital public services or tackling the climate emergency. And yet, private lenders continue to charge low-income countries sky-high interest rates on their loans. Often the original loans have been repaid multiple times over but the ongoing payments on top of that are never cleared because the interest keeps growing. Learn more about what’s driving the global debt crisis and how it is affecting people’s lives in different countries and income groups.
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