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THE EXTENT OF the global debt crisis is staggering. Low and lower-middle-income countries between them have a total external debt of US$ 1.45 trillion, and in 2023 alone paid US$ 138 billion just to service their debts.
At the beginning of 2025, 54 countries are in debt crisis, at a time of record-breaking humanitarian need and the crippling impacts of climate change. In this topsy-turvy world, debt trumps everything.
Over 75% of all low and lower-middle-income countries spend more on debt servicing than they do on health care, with 55% of these countries spending on debt servicing more than double that of spending on health. Over 50% of lower-income countries are spending more on debt servicing than education.
This has a devastating impact. It means fewer teachers, fewer nurses, larger class sizes, more ill-health, more disease and an inability to respond to climate change. It also means women end up acting as shock absorbers of under-developed public services as they lose access and jobs in those services, and they provide the majority of care in the absence of the state.
In an ActionAid report published this month, Who Owes Who, external debt, climate debt and reparations in the Jubilee year, we ask some fundamental questions. What is really behind this staggering level of debt? Who really owes who?
We tend to view things through the prism of charity — we support the Global South. Yet rich countries have a climate debt, a history of plunder, current day tax avoidance and profit shifting and unmet aid promises.
It is calculated that rich countries have achieved up to 70% of their economic growth by appropriating more than their fair share of the ‘atmospheric commons’, the concept of the Earth being a shared resource that belongs to everyone equally. Based on the lowest estimates in the definitive study of atmospheric appropriation by Fanning and Hickel in 2023, the climate debt that rich polluting countries are liable to pay to climate vulnerable low and lower-middle income countries is US$ 107 trillion. This is more than 70 times greater than the total external debt of US$ 1.45 trillion that these countries collectively owe.
There is a shocking imbalance of global power that enables the external debts of lower income countries to be brutally enforced by the International Monetary Fund, whilst the climate debts of rich countries go largely unpaid and unenforced. To add to this, two thirds of climate financing was given as loans to countries that in many cases are already facing a debt crisis. This is bizarre. How can giving someone a loan count towards paying back a debt?
The most indebted countries of all tend to be rich countries. However, in practice, rich countries pay much lower interest rates on their debt and almost never come under duress as a result of having to make debt repayments. In contrast, low and lower-middle-income countries, which owe a fraction of the amount owed by rich countries, are forced to sacrifice the health, education, social protection, well-being and future prospects of their citizens, following strict IMF austerity steers.
Demands for reparations are likely to gather momentum in 2025 with the African Union declaring this to be the Year of Reparations, and a major summit starting on February 15th. There is also increasing talk about the need to provide wider reparations for the colonial plunder of resources. India, for example, was estimated to have a 24% share of global GDP in 1700, before British colonial rule, but had just a 4% share of global GDP at independence in 1947.
This colonial plunder of resources is not only a historical matter. It is a very real and ongoing part of the present unjust global economic structure, enabling to this day the continuing extraction of resources from the Global South to the Global North.
The State of Tax Justice report in 2024 shows that multinational corporations are shifting on average US$ 1.13 trillion worth of profit into tax havens, causing governments around the world to lose an average US$294 billion a year in direct tax revenue.
Ireland’s foreign direct investment policy is a core pillar of our economic model and is part of this wider problem.
Too little attention is paid to the impact that corporate profit-shifting and tax avoidance continue to have on developing countries as a result of Ireland’s model. Revenue is being siphoned away that should be paying for hospitals and schools, prolonging a reliance on aid and keeping people trapped in poverty. And these flows are causing immense climate harms.
Research published by the EU Tax Observatory estimated that Ireland remains the destination of approximately $120-140bn of shifted corporate profits annually, jointly the first-largest destination in the world.
ActionAid Ireland research in 2023 revealed that investment managers registered in Ireland held US$ 6.2 billion in bonds and shares attributable to fossil fuels and agribusiness in the Global South. The top six investments are all oil and gas companies.
Broken promises of development aid also are part of the problem. In 1970 a clear target was agreed in a United Nations resolution that each economically advanced country will reach a minimum net amount of 0.7% of its gross national product by the middle of the decade. Just US$ 223.7 billion was mobilised in 2023 representing an average of 0.37% of the GNP of OECD DAC members.
If this target had been met as promised by the mid-1970s – over 50 years ago – this could have provided a cumulative total of up to US$ 7 trillion in additional revenue for low and lower-middle-income countries. Had this quantity of aid been provided, it is unlikely that any of these countries would have needed to borrow the money that has now left them facing a debt crisis.
Now we can add in the devastating impact of USAID cuts, a whooping almost $70 billion in 2023 alone.
The need for reform is clear, and Ireland must play a role. There must be a fundamental overhaul of the global financial architecture, shifting the power over debt away from colonial institutions like the IMF to a more representative and inclusive UN body through agreeing a UN Framework Convention on Sovereign Debt.
In the face of the climate crisis, governments in lower-income countries need to prioritise urgent investments in public services and a just transition over meeting external debt payments.
African nations at the UN are setting an example, building on their success in shifting oversight of global tax rules from the OECD to the UN, through a new Framework Convention on Tax Cooperation.
It’s time for Ireland and others to unite to call for both debt cancellation and fundamental structural reform to the colonial architecture that perpetuates debt crises.
Karol Balfe is CEO of ActionAid Ireland. ActionAid works to strengthen the capacity and agency of millions of women and girls around the world who face many forms of inequality and violence throughout their lives.
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Hi Karol, you may or may not have noticed but the Irish people are amongst the most generous when donating to charitable organisations working to help the citizens in third world countries. You may or may not also notice that the Irish Government contributes big amounts of Irish taxpayers money via foreign aid. You may or may not also know that the Irish Government and NGOs spend billions of Irish taxpayers money on hosting third world citizens in this country.
Hey Karol, we already givin too much lady.
@Lone Hurler: Ireland is also one of the most indebted countries in the world too
@Lone Hurler: You may not have noticed but this article is not about aid but about debt. African countries spend about as much on debt repayments ($60billion) every year as they receive in aid.
@N M: so? How much do we receive in Aid per year, and how much do we pay on debt? We pay more than we receive. You just said African countries pay the same. So you’re effectively saying that other countries are paying off Africas debt for them. Who’s paying off our debt? Ourselves.
@N M: How about forcing the African politicians who stole this money to give it back!
@N M: It’s long past time that Africa paid it’s own way. Propped up by Western money for far too long.
@Luke Littler: If you don’t agree with what she’s saying fair enough, but to personal insult someone shows a lot about your character.
@Daniel Dunne:
Ireland owes nobody anything, please get your facts right.
@Brian Hunt: What about Shell? Maybe Guinness? Why do you assume that it was stolen by an African politician?
@N M: They’re notorious for it!
I don’t know if Karol has spent much time in Africa. If she had she would see that no amount of debt cancellation or aid will help them. Their leaders take everything. Any company that invests heavily there will suddenly be subject to new “taxes” none of which benefit the people. My conclusion after being there for many years that it’s hopeless unless it’s recolonised. The Chinese are beginning to do that.
@Fran Ken: So the solution to corruption is… to reward corruption? African debt frequently dates back to military dictatorships that we were happy to lend money to. Western companies have made trillions off the backs of Africans through corruption and now we expect the people to pay for it?
@N M: you are just reciting tired old truisms about Western companies exploiting Africa. Any western company in Africa gives better working conditions and salaries to their employees than they will get from local employers. The problem is there aren’t enough western companies investing there because they get fleeced by kleptocratic politicians. As for debt, every country borrows and invests it in infrastructure. African leaders borrow and spend it on themselves. This is still happening.
@Chutes Idiot: Cancellation of billions of USAID on the basis of a few examples of bad management is not an audit. It is the moral equivalent of the British government cancelling relief works in Ireland in 1847.
@Chutes Idiot: USAID had many problems but not zero accountability. It is Elon Musk who seems to believe that he has zero accountability.
@Chutes Idiot: Also Africa does not have zero accountability. It has an innovative and developing African Court of Human Rights. African Courts have overturned corrupt elections in Malawi, Senegal. And it is African nations (the Gambia, South Africa) who are now holding Asian countries (Myanmar, Israel) to account for genocide that would otherwise go unnoticed.
@Chutes Idiot: https://oig.usaid.gov/our-work/audits-memos
@N M: Relief work in Ireland,the British were committing genocide against the irish people.
And CEO Karol gets paid how much…to tell us this?
@Helena Camella Cummins: Poor countries need to copy the successful political and economic models clearly demonstrated by countries like post colonial Ireland where obesity not hunger is an epidemic.
Can you please tell me why we have to give more?.The leaders of these countries siphon the aid money into their Swiss bank accounts so no amount of money will help the people. Greed is endemic in Africa. It is about time these countries stopped looking for handouts.
@Gerry Lamont: Greed is endemic in Africa?! Have a look at the Western world built on African raw materials!
@Gerry Lamont: USAID was discovered to be a front for using money to prop up and finance leftist anti US interests. All “charities” need to be investigated.
@thomas molloy: fake news.
@thomas molloy: You sound like Trump
Of course Karol is taking this position. Her whole income is based on this scam.
The gravy train needs to keep running for all these NGO’s to keep bleeding Ireland dry.
The majority of, if not all, countries in Africa are corrupt.
How about this instead Karol: all NGO’s in Ireland are forensicially audited to see where the €7Bn of Irish taxpayers money is actually going?
NGO’s: taking money from poor people in rich countries & giving it to rich people in poor countries.
@Jim: god forbid Karol would have to get a real job
Charity begins at home. There is enough poverty in Ireland for Irish liberals to worry about.
@common sense: But debt relief, especially for corrupt debts, is not charity. It’s justice.
@N M: So, do you think that England owes Irish citizens a debt based on 800 years of forced servitude and labour? Are you going to champion this cause? Are you involved in bringing attention to countries which still use (slaves) sweat shop workers (children) to this very day? You sound very passionate, so I am sure you are deeply involved, no?
@N M: African countries are billion in debt to China. Congo, Zambia, Ivory Coast, Eritrea etc are all in debt to China. Billions. Why are we paying China the money they are owed by Africans? It has absolutely nothing to do with us. Why don’t the Chinese cancel the debts. Why are we in the middle of this? Fu€k China and fu€k Africa.
I have worked in Africa many times. Corruption is everywhere. They have spent 100s of millions on military equipment. To clear this is debt would only encourage more Corruption and military spending. If it enhanced people’s lives which it won’t I would be in favour of debt relief
@finbarr walsh: While there I seen no signs of irrigation in the West Bank just lively youths hanging around doing nothing good, while on the other side people working in lush fields. Iran and Ireland should be sending them irrigation tubing not guns and money. Why do so many Irish love to finance poverty and disfunction instead of solving it. It looks more and more like it’s facilitating a Poverty Industry.
@thomas molloy: of course it is.
If they address the cause(s) & not the symptom(s) they might actually solve a problem. They really don’t want to do that because it would bring the gravy train to a screeching halt.
It is in their best interests to keep the disfunction going because it’s exactly a Poverty Industry (a multi billion Euro industry, just like climate change).
Any & all of these NGO’s/charities are just bleeding the people dry. None of the would survive in the private sector where they actually gave to do a days work.
Africa is a basket case. Eg DRC/ Rawanda
@You Cant Be Serious: So is Europe e.g. Transdinistria. See I can do that too.
@N M: Do they chop tens of thousands of people up with machetes there, like in Rwanda? Or is it more like the raping and burning of women which happened a few weeks ago in Congo (or whatever it’s calling itself now)? Highlight your comparison for us please.
@N M: is that another of Putin’s wannabe territorial swipes
and why would we do that? we are generous enough accepting them in our lands
@Dominic Leleu: ‘Our lands’… :)
No africa will never be dept free.to corrupt
Africa is rich its just mismanaged.
No. Africa needs to stop corruption and violence by local warlords, form viable, stable governments, and join the rest of the world in paying its own way.
Irelsnd is 250 billion in dept..This ix yhe part you dont hear..
Africa…Not one cent should be given from ireland…Nobody bailed us out…we are broke…busted but thr Govt wont admit it…because they caused it bailing out the banks…
Define “rich country” and what this is based on. Pure GDP? What about national debt? Debt per capita?
The problems with Africa started when the European powers left
@AnthonyK: Em… genocide happened before that. And also the European powers left a huge debt burden on African countries when they left. And also they didn’t leave: they made sure that wealthy European companies could continue to operate without worrying about the rights of inhabitants.
@AnthonyK: Left with all their resources and raw materials. White Belgians being to the forefront in Congo.
@Jacintha Dumbrell: White Belgians? Is that a chocolate?
A lot of Africa is now being run in favour of the Chinese and the Russians, let them look after it
Tribes still fighting tribes there, nearly each country, children soldiers, rape, murder strife… Hopeless cause, saving babies to grow up and continue more of the same….
Sadly most donations end up in the foreign account of the leader at the time.
A friend of mine once paid off all his girlfriends debts. The next month she goes out and gets into debt again.
Re world issues. If you want a good laugh tune in to another anti Trump interview on Pat Kenny.
@thomas molloy:
Is he not out protecting the Badgers.
@Dan Murphy: while trump is playing with a beaver or two
Is this news or an advertisement? I thought the journal was a newspaper, but obviously they’re not getting the reader sponsorship they need.
Waste of time, I would not give the whole corrupt kip the proverbial steam off my pi..
France, England, Belgium, Germany, Netherlands et al who had colonies there and raped and pillaged them. Those countries destroyed Africa’s chances of standing on her own two feet. Continued neocolnialism and things like France still benefitting from the use of the “African franc” will always hold her back. Those countries need to pay reparations, not just cancel debt.
@James Groden: The colonists did damage. But they also left Africa in a better state than they found. The infrastructure (roads, railroads, schools, hospitals etc have been in terminal decline since they left. The resources are still there. If colonialism is as bad as you say the countries like Singapore should be basket cases.
I’m not defending colonialism of course, just pointing out that it’s being used as an excuse.
@James Groden: This is the same argument as is used for supporting ‘Palestinian’ refugees, the number of whom has far outgrown any population count of ‘Palestine’. They are the only group in the world whose children and grandchildren are themselves considered refugees.
By your logic, we should be offering aid to anyone, anywhere, who ever suffered at the hands of an occupying power right back to the dawn of humanity.
There’s no such thing as a “fair share” and this is just another left-wing activist spouting out utter nonsense. If canceling debt actually solved anything, Africa would be an economic powerhouse by now. This has been done before, multiple times. The West has wiped away billions in debt for African nations, only for those same countries to borrow even more and end up in the same crisis a few years later. The problem isn’t debt, it’s corruption, mismanagement and failed collectivist policies. Here’s the part no one likes to talk about: Africa’s biggest lender isn’t the West, it’s China. The CCP has been handing out massive loans to African nations, not out of charity, but to gain control over ports, railways and resources. Try telling Beijing to forgive those debts and see how that goes.
@William Jennings: https://www.news.com.au/finance/economy/china-forgives-debt-for-17-african-nations/news-story/28ab7f45440142634ff8efd0360b2fec
China also gives out interest free loans (IFL’s).
The reason that African countries relapse is because the IMF forgive the loans and then offer new loan conditions that seem more favourable which the countries need after their recession to boost their economy. It’s a vicious cycle.
Not being sarcastic, but a reasonable solution would be for Africa to sell Europe one of their countries. Preferably one with resources that could be administrated in a fashion that made it a profitable enterprise. Fair trade, and all that.
Have you seen the debt levels in the developed world? Some countries in the West are building up huge debt servicing bills. The UK is about to go bust and require an IMF intervention over it! I think what I’m trying to say is debt levels are out of control globally (again) and a bursting bubble seems to be imminent, in that scenario it’s every country for themselves. I don’t foresee much attention being given to Africa unfortunately. USAID cuts is only the beginning.
Is Karol actually having a laugh ? We need to stop aid and charity to Africa..over 50 years sending money for clean water, billions from everyone and still not done.
Year of reparations, Karol, have you calculated how much the Vikings will be paying us? The English? The Barbary? And ME ?
Well, over a thousand years of enslavement, displacement, millions dead etc. Just over 100 years our own country..it has been proven all that money is wasted funding NGOs and back pockets.
And now economic migrants and exted family are here iligally and spending over 1 billion on just accomadation.
Looking for another soft touch to fund your wages ..
No
Debt is a tool used by the American hegemony, the IMF & the World Bank to keep the global south under their control so they can keep extracting valuable resources and stop anyone from challenging them. They force austerity on these populations in order to enrich American corporations. The Cold War is a great example of this. America went into SE Asia to stop them from becoming communist, as they democratically voted to do so, in order to keep these markets open to American capital. Debt does not matter. It’s just a tool for the rich to get richer.
Those who robbed the countries should pay compensation, that is the former colonist countries, they robbed the assets from their colonies.
Just write off their debts. Problem solved.
@helen mary fitzsimons: see Keth417 above
Endemic corruption across most African countries is the biggest issue. Nothing will change until that is resolved!
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