Illegitimate debts should not be repaid!

Numerous developing countries have to spend more money on debt service to donor countries and international financial institutions than they can invest in their country’s social spending. Many such credits have been granted under illegitimate conditions.

An Ecuadorian initiative newly raised the question of illegitimate debts. These are debts for failed projects, debts for military expenditures or debts that mainly served to finance the private consumption of the rulers or that went into corruption. In short: debts without any benefit to the general public.

The exceptional solvency in the 1970ies prompted the international finance sector to look for options to invest accruing petrodollars. Thus credits were given without respecting regional needs and particularities.

In other words: Not the needs of developing countries but business cycles in the finance world influenced the flow of credits. Borrowers now raise the legitimate question of whom to blame for this over-indebtedness.

Bread for All has been lobbying for debt relief in behalf of developing countries for decades. In particular illegitimate debts should be eliminated. In Ecuador, for example, Bread for All is supporting an initiative in which the economist Franklin Canelos is actively participating in the state auditing commission for the legitimacy of foreign debts.