Islamic Relief Debt Policy

Abstract

According to the IMF’s World Economic Outlook, Africa as a region has paid 12.6bn USD in '08 and in '09 will pay 13.7bn USD in interest alone on its foreign debts. 'Developing Asia'1 has paid 50bn USD in '08 and in '09 will pay 57.4bn USD in interest alone. According to the Jubilee Debt Campaign2, in 2005, ‘developing’ countries paid a combined US$513.8 billion in debt repayments, while in the same year they received a total of US$106.8 billion in official aid. The very poorest of them3 paid a joint US$43.2 billion in debt repayments, while they received a combined US$40.4 billion in development aid. This means that, despite significant amounts in aid, the net result is that the countries end up poorer every year. The countries where IR works in4 had a combined debt of 1.36 trillion USD in 2006 and spent on average 3.08% of GDP on servicing these debts. These staggering amounts, paid to service debts often incurred by previous regimes and not invested in long-term development of the country, are amounts that cannot be spent on health and education5, key means to support countries’ escape from poverty. In comparison, the UN estimates it would cost only USD 11bn annually to achieve universal primary education by 2015 (goal 2 of the UN’s Millennium Development Goals [MDGs]6).