What would it cost us to cancel poor country debt?

Only £2 per taxpayer per year.

In response to the repeated question: What would it cost to cancel the debt?, the Jubilee 2000 Coalition has calculated the figures. We find the cost of cancelling the debt of the poorest countries would be negligible -- between £14 million and £75 million per year, according to House of Commons figures. The cost per taxpayer is likely to be under £2 per year, or four pence per taxpayer per week.

The new report, In our own backyard, is published this week, and is available for £5 from the Jubilee 2000 Coalition, PO Box 100, London SE1 7RT.

The report also reveals that Britain is refusing to pay a debt to the United States that is exactly the same size as the debt that Britain is demanding developing countries pay – £ 8.8 billion.

The pennies flowing into Britain mean little here, but cost lives in poor countries. Using United Nations figures, In our own backyard estimates that in Zambia alone, the lives of 400 babies and children would be saved each year if Zambia stopped paying Britain and used the money instead for health and education.

“Why do we demand that children in Zambia die so we can be repaid, yet at the same time we refuse to pay our own debts?” asked Ann Pettifor, director of the Jubilee 2000 Coalition.

Britain's debts

The report reveals that Britain borrowed money from the United States to fight the First World War; we stopped making payments in 1934, and have not paid a penny since. The United States Treasury confirmed last month that the debt is still due and that each year it adds on the unpaid interest. The total debt is now $14.4 billion (about £ 8.8 bn).

Their debts

The total debt to Britain from all developing countries is also £ 8.8 billion. Of this, only 4% is owed to the Department for International Development (DfID) and 96% is owed to the Export Credit Guarantee Department (ECGD). This is debt where ECGD provided insurance cover for exports, the importer failed to pay, and ECGD paid the exporter. In that situation, ECGD nationalises the debt and tries to collect.

Of this debt, £5.1 billion is owed by the 52 poorest countries, where Jubilee 2000 believes that substantial debt cancellation is essential. In 1997/98 Britain received £86 million from these countries, but this will surely fall after some of these countries go through existing debt relief processes. The report makes various calculations, based on House of Common library data, as to what it would cost to unilaterally cancel all of the debt of 52, and estimates that it will be more than £14 million and much less than £75 million per year. Compared to Britain's aid and defence budgets, this amount is extremely tiny.

Cancellation is possible

Jubilee 2000 also reveals that it is possible for Britain to act unilaterally to cancel poor country debt. Chancellor Gordon Brown has always argued that this would not help poor countries because of the arcane rules of the “burden sharing” process in existing debt cancellation. But Norway has resolved this problem and has already announced unilateral debt cancellation for all of the poorest countries.

(more details on Norway's debt cancellation)

“If Britain cancels poor country debt, the poorest people will benefit, and it will set a clear moral example for other industrialised countries. It is time to stop making the poorest people do something we are not prepared to do ourselves. Cancel the debt now,” said Ann Pettifor.

“Britain is a special kind of Robin Hood, robbing both the rich and the poor. Britain demands that poor countries repay their debts at whatever cost, including children not going to school, yet Britain refuses to pay its debt to the United States,” she said.