Money makes the world go round but what happens when millions of people don’t have enough? What happens when they pay more for debt service than health care and education?

Debts made decades ago continue to mortgage the future for millions of people.

How it started
Developing countries loaned billions of dollars, with interest, to nations with developing economies. Much of this money was not properly supervised. Dictators often used it for wasteful, corrupt projects.

The situation worsened in the 1970's. Oil-exporting countries invested growing oil profits in European and U.S. banks. The banks loaned this money to developing nations for a profit. Interest rates soared in the 1980s, outpacing developing countries' ability to pay.

A growing concern
By 1997, developing nations' total debt to developed nations, the World Bank and the IMF was $2.17 trillion, up from $1.4 trillion in 1990. Developing countries were paying rich nations $717 million in debt service every day.

This money is unavailable for the health, education and economic development of the world’s poorest nations. The burden hits the poor the hardest.

Solutions for a better future
Something is being done, though we need to do more. In March 1989, the Brady Plan, named after the U.S. Treasury Secretary at the time, began allowing countries to negotiate substantial reductions in debt and debt service. It encouraged many emerging market countries to adopt and pursue ambitious economic reform programs while regaining access to international capital markets.

According to a recent statement made by the Guardian newspaper, Britain will spend 100 million pounds a year on debt relief, helping more than 30 countries repay debts to the World Bank and African Development Bank.

There’s more we can do
A new British-USA proposal would cancel debt from developing countries. Britain would write off ten percent of the debt owed by 32 of the world's poorest countries to the World Bank and others by putting aside $180 million a year. The IMF would also sell $85 billion in gold to pay for those countries' debt. A lot of money, but readily affordable after a small adjustment in military spending.

Rising military spending
The UN states that annual military spending will rise to nearly $950 billion by the end of 2004 - a substantial amount of the world's resources. Reducing this by just 10% would be enough to pay down the entire Third World debt in less than 20 years.