| Bilateral debt |
Debt owed to an individual governments, like the
USA, Japan and France. |
| Commercial debt |
Debt owed to private banks. |
| Creditors |
There are three groups of creditors. These include
mulitlateral creditors (the IMF and the World Bank), bilateralcreditors
(rich country governements), and commercial creditors (banks). |
| Debt cancellation |
The legal cancellation of a loan agreement by
a creditor.
|
| Debt service |
The total amount, (principal and interest), a
country spends; the amount paid may fall short of payment due. |
| Debt sustainability |
According to creditors, this is achieved when
a country is able, in the long term, to repay its debts. Many
groups argue that a country must be able to meet the basic needs
of its people - in food, education, health and welfare - before
debt sustainability is achieved.
|
| G7 |
The group of the seven most powerful countries;
Canada, France, Germany, Italy, Japan, UK and USA. |
| G8 |
When Russia joins the G7, the group becomes known
as the G8. |
| HIPC |
The Heavily Indebted Poor Countries Initiative.
Launched in 1996 this was the first co-ordinated attempt by
the creditors to deal with the debt crisis. Up to 41 countries
(listed below) are eligible to be considered, but not all will
receive debt relief. The creditors make proportional cancellations
to reduce the debt to a level which is "sustainable".
By definition, this is the level at which a country is unlikely
to default on debt service payments, and has nothing to do with
development criteria. Eligibilty for HIPC debt relief is closely
linked to a country's performance under SAPs. |
| IFIs |
International Financial Institutions; the World
Bank, the International Monetary Fund and the Regional Development
Banks. |
| IMF |
The International Monetary Fund was set up to
enable countries to trade. The IMF will give loans to countries
when their imports are greater than their exports, (when their
costs are higher than their income). IMF loans come with strict
conditions. If these are not adhered to aid or debt relief may
be withheld. |
| Multilateral debt |
Debt owed to an international agency, such as
the IMF and the World Bank. |
| PRSPs |
Poverty Reduction Strategy Papers. These are national
development
plans which governments in low-income countries are required
to produce in order to receive debt reduction under the the
HIPC initiative or cheap loans from the IMF and World Bank.
The IMF and World Bank claim that PRSPs are different than SAPs
(see below) but studies have shown that, in reality, the programmes
in these plans are very similar to SAPs. |
| SAPs |
Structural Adjustment Programmes. Designed by
the IFIs, these programmes essentially change the nature of
a country's economy and the role of its government. The aim
is to ensure the repayment of debt. New loans and relief on
existing debt are often conditional upon the implementation
of SAPs by debtor countries. Export industries are promoted
and currencies are devalued to make exports cheaper overseas.
Government spending is reduced and state industries are privitised.
They are also known in Africa as Stomach Adjustment Programmes
or Suffering for African People.
Click here for an overview of SAPs
 |
| World Bank |
The World Bank provides long term loans to developing
countries. Traditionally the World Bank has funded large scale
infrastructure projects, but it now also lends to the social
sector. The World Bank claims that poverty reduction is its
overall aim. Loans to the poorest countries are usually at very
low rates, with the money to be repaid over fifteen to twenty
years. |
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