Diakonia is working for justice in the handling of the debts of poor countries and debt write-offs. Recipient and donor countries must take joint responsibility for debt write-offs, so that such action fosters democracy, promotes human rights, and serves to fight poverty.

Debt write-offs to fight poverty

Today there is an international consensus: Debt write-offs are needed in order to fight poverty. The millennium goals concerning halving poverty by 2015 also point out debt write-offs as an important responsibility of the rich countries.
Pressure from NGOs has been important in getting action to be taken on debt write-offs in recent years. But compared with the total burden of debt of poor countries, only a very small portion of debts have actually been written off. Poor countries are still making debt repayments with money that could be better spent on investments in health care and education, for example.

Illegitimate debts and responsible lending

The World Bank, the IMF and other donors over the years have lent large amounts of money to undemocratic leaders and projects that have not contributed to the betterment of life for poor men and women. But today it is precisely these poor men and women who are now being forced to bear the cost of irresponsible lending in the past – termed ‘illegitimate debts’.

It is Diakonia's view that lenders must take their share of the responsibility for the irresponsible lending that has occurred in the past. We are therefore working for all illegitimate debts to be written off, and for the institution of mechanisms that will lead to more responsible lending in the future.

People must be empowered

It is Diakonia's view that both recipient and donor countries have a joint responsibility when it comes to debt write-offs and new borrowings. The focus must be the results to be achieved: fighting poverty, the protection of human rights, environmental considerations, and the promotion of democratic development.

But donor countries, the World Bank and the IMF make demands with respect to the economic policies that recipient countries are required to pursue. These demands are not based on the strategies for eradicating poverty that recipient countries have formulated themselves in order to get access to debt write-offs, loans, and aid. The consequence of this is that lenders with their demands are riding roughshod over democratic decision-making processes.

For this reason, Diakonia is working for the discontinuation of such low-level control in the form of demanding certain economic reforms in countries that are the recipients of loans. We are also working for the parliaments and civil society of recipient countries to exert influence in processes relating to debt write-offs and new loans.