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Press Release: Embargo 00:01 20.4.2002

 

POOREST COUNTRIES FINANCING EXCESSIVE CONSUMPTION OF THE RICH, SAYS NEW REPORT


The "heavily indebted" poor nations of the world are in fact financing the massive US deficit, says a report published today (20th April 2002) by the Jubilee Research programme at the New Economics Foundation. The publication of "The United States as a HIPC* - how the poor are financing the rich" coincides with the IMF and World Bank Spring meetings in Washington.

The report shows how the US alone owes almost as much as all of the developing world put together, including India, China and Brazil, yet pays a fraction of what they do to service its debt. It reveals that:

  • the US has built up a massive external debt of $2.2 trillion - almost equal to the combined debts of all developing countries, $2.5 trillion. 
  • the US pays only $20bn per annum to service this debt, while poor countries are crippled by more than $300bn in debt service payments 
  • in effect, the developing world is financing the US's massive accumulated deficits by capital flight and by the forced holding of dollar reserves. 
  • Poor countries borrow funds from the US at rates as high as 18% while at the same lending to the US (through the purchase of Treasury bonds) at rates as low as 3%. (The reason they are forced to purchase Treasury bonds is to maintain excessively high levels of reserves as insurance against speculation and financial instability.) 
  • The report shows that for many countries "capital flight" is just the flip side of external debt. If capital flight were to be included in official statistics, then at least 25 African countries would be net creditors to the West. 

Ann Pettifor, director of Jubilee Research, said: "280 million Americans bingeing on Toyota Land Cruisers, Sony video players and Cartier watches - are doing so by raiding the piggy bank savings of 5 billion people in developing countries. Its time the rich financed the poor, instead of filching from them." 

-ENDS -


For more information or an advance copy of the report, please contact Jessica Bridges - Palmer on

w: 020 7089 2856
m: 07789 515 520
e: jessica.bp@neweconomics.org 

Ann Pettifor in Washington: 00 44 7770 886 146 
Romilly Greenhill in Washington: 0044 7812 605 131 


Notes to editors:

1. Jubilee Research is a program of the New Economics Foundation, a think tank unique in bringing together the ideas, people, resources and influence to challenge business-as-usual. We create practical and enterprising solutions to the social, environmental and economic challenges facing the local, regional, national and global economies. Jubilee research headed by Ann Pettifor, former director of the Jubilee 2000 UK campaign.


2. The report is being launched to coincide with the Spring Meetings of the World Bank and the IMF. The report authors are attending the Meetings and can be contacted there for comment (see above).