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Reducing Global Inequalities

Page history last edited by catrin treanor 7 years, 5 months ago

How can global inequalities be reduced?

 

  Loans are money that has to be repaid with interest at some time in the future. When poor countries borrowed large sums of money from richer countries in the 1970s the idea was that they would be repaid from the profit that the poor country made from investing the money in building factories so that they could manufacture goods and export them for profit. 

This did not work for many countries and the debt grew larger as interest payments grew. Countries couldn't afford to pay their debts and the interest payments grew and grew so debt got even bigger. The banks then offered to reorganise countries' debts to make them more manageable and in return the indebted countries had to cut their spending in order to make repayments. For example, Uganda ended up cutting its budgets for healthcare and education - this was disastrous as these are vital to ensure a country's development.

 

Debt for Nature Swaps:  READ this article at http://www.bbc.co.uk/news/world-latin-america-10958695 and see page 203

The United States and Brazil have signed an agreement converting $21m (£13.5m) of Brazilian debt into a fund to protect tropical ecosystems. Instead of paying back the debt, Brazil will use the money to conserve its Atlantic coastal rainforest, as well as the Cerrado and Caatinga ecosystems. All three are under threat from severe deforestation, but receive much less attention than the Amazon. The US has signed similar debt swap agreements with 15 other countries.

Brazil's Environment Minister Izabella Teixeira said the deal represented a "qualitative leap" in cooperation with the US.

Brazil will use the money over the next five years to support conservation and boost the livelihoods of people who live in the threatened forest areas.

 

 Debt Abolition -

 

There have been global campaigns by NGOs to force the world's richest countries to take responsibility and cancel third world debt. The Make Poverty History Campaign is an example of this - in July 2005 there were ten Live8 concerts around the world that raised awareness of the issue.

 This resulted in the world's eight richest countries - The G8 - agreeing to cancel all debt owed by the 18 HIPCs (Heavily Indebted Poor Countries) - but these countries had to show that their governments could manage their own finances and were not corrupt. They also had to agree to spend the money saved on education, health and reducing poverty in their own countries.

This has been a success to some extent. But African countries still owe $300 billion and some will never manage to repay it.

An example of success in Uganda: Cancelling $1.5 billion of the country's debt has had a positive impact on Uganda's development as access to clean water, spending on education an adult literacy rates are on the rise. The amount of undernourished people has fallen. The percentage of the country's income spent on debt repayment has fallen from 81% to 9%.

 The HIPC initiative -if you want to know more. 

 

AID

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