- Q: How does debt relief improve education systems?
- A: Debt relief enables governments to free up budgets formerly used to pay down their debts. They can rededicate these funds to cover education costs—for example, to support teacher training, build schools, or provide better equipment and supplies for students.
World Bank: Partnering To Help Countries Move Forward
In 1996, the World Bank and the International Monetary Fund launched the Heavily Indebted Poor Countries (HIPC) Initiative so that countries encumbered by debt could get back on their feet. In 2006, the Multilateral Debt Relief Initiative (MDRI) was launched to provide additional resources to HIPCs to meet the MDGs. By June 2010, $76.4 billion in HIPC debt relief had been committed to 36 countries, of which 30 countries have received an additional $45.8 billion under the MDRI.
MDG 8 also addresses the digital divide. Studies show that a 10% increase in high-speed Internet connections result in economic growth of 1.3% in developing countries, yet many people live in rural areas without access or are too poor to afford it. The World Bank is the largest international funder of information and communication technology development, currently supporting projects in 95 countries.
A global partnership is helping Latvia weather the financial crisis.
- We can strengthen our global partnership by:
- promoting debt relief
- developing IT infrastructure
- expanding trade agreements
- improving access to affordable drugs
- increasing poverty-reducing expenditures
Making Strides in Global Partnership
Over the last 13 years, the International Development Association (IDA), the World Bank’s fund for the poorest countries, has been a leader in partnering to reduce the debt burden of developing nations. Under the Enhanced HIPC Initiative, IDA’s share is 20% of the total estimated cost of debt relief. In addition, IDA provides more than 50% of debt relief committed under the MDRI.
Our Partnership Strategy
- Reduce low-income countries’ burden of external debt through debt relief
- Improve access to global markets for goods and services through advisory services and grants
- Connect people and markets by investing in IT and communications infrastructure
Some of Our MDG 8 Results
Under the Enhanced HIPC Initiative, IDA has committed more than $16.4 billion of HIPC debt relief. IDA’s aid for trade financing rose from $2.4 billion a year between 2002 and 2005 to an average of $3.9 billion a year in 2007 and 2008.
- Ethiopia: Improved the quality of education through curriculum reform, teacher training, and better administration of schools.
- Mozambique: Provided direct budget support to the government’s poverty reduction strategy.
- Afghanistan: Up from almost zero in 2002, more than 2 million telephones now keep Afghans in touch.
How’s the World Doing?
- $76.4 billion in HIPC debt relief had been committed by June 2010 to 36 countries, of which 30 countries have received an additional $45.8 billion under the MDRI.
- 54% of revenues were used for poverty-reducing expenditures in HIPCs in 2009, up 10% from 2001.
- 12% contraction in global trade in 2009.
- 10 -fold increase in Internet users in developing countries, from 2000 to 2009.
