TOWARDS AN ALTERNATIVE/243countries. These reserves account for only 16 per cent of outstanding
loans. The World Bank would still have S9 billion in reserves. Such
a measure would not disrupt the Bank's operations. The World
Bank's statutes should be amended to allow it to write off debts; the
total cancellation of the debt of the poorest countries could
immediately improve the lot of some 300 million people.
As for private banks, since 1982 they have managed to restructure
their portfolios. On average, Third World debt accounts for less than
5 per cent of their outstanding loans. These banks have taken in more
than was their due thanks to interest on arrears. They have also
made provisions for bad loans; in most countries of the North, they
received tax write-offs for these provisions. It seems only natural that
they should now write off the remaining outstanding loans. A similar
approach should be adopted by other financial institutions that have
outstanding loans to Third World countries.
FINANCING SOCIAL NEEDS WORLDWIDE
The Third World
The Cancellation of the Debt
The Third World debt totalled SI,940 billion at the end of 1995
(OECD, 1996). Although hair-raising at first sight, this figure
accounts for only 10 per cent of total worldwide debt. It should also
be kept in mind that we are dealing with debt contracted by countries
representing 85 per cent of the world's population! The industrialised
North, with only 15 per cent of the world's population, is much
deeper in debt than the Third World.
As for sub-Saharan Africa, things are even more clear-cut. Its debt
accounts for only 1 per cent of worldwide dollar and hard currency-
denominated debt, while its population (590 million people)
represents more than 10 per cent of the world's population. These
countries shoulder the greatest burden in terms of human suffering
in order to meet their debt payments. Debt-servicing costs sub-
Saharan Africa more than four times the total amount allotted for
health and education budgets.
Cancelling these countries' debt, especially in the case of sub-
Saharan Africa, would not disrupt the world economy in any way.
Refusing to cancel the debt, however, is akin to refusing assistance to
an entire population in mortal danger.