Earlier this year, the International Development Finance Organization published a list of 77 countries where debt repayments will exceed 20% of government revenue in 2023. These include Bangladesh, Kenya, Argentina, Lebanon, Mali, Burkina Faso, Niger, Pakistan, Sri Lanka, Uganda, Cameroon, Sierra Leone, and others, all of which have seen major protest movements of various types in the past few years, some even reaching revolutionary proportions. 

　　The amount of debt itself is not as large as that borne by many Western economies, but the terms on which it is provided amount to an international version of loan sharking. Britain can issue 10-year bonds at 4%, while the average borrowing cost for African countries is closer to 9%, and that’s for those that can still borrow on commercial markets. 

　　Not only that, they are forced to denominate their bonds in euros or dollars, which means that any depreciation of their currency will significantly increase the cost of borrowing. Especially when Western countries raise interest rates, this not only pushes up the interest rates paid by poor countries, but also increases the value of the currency they pay. As a result, many countries are completely squeezed out of the bond market and must rely on funds from governments and multinational institutions to survive. 

　　Debt Trap 

　　Since Lenin’s time, imperialists have profited from small countries through debt traps: loans are often used for infrastructure projects, with the main beneficiaries being certain multinational corporations. The loan is conditional on the use of companies, materials or machinery provided by the lending country. 

　　Thus, we see Japan lending money to Pakistan for an irrigation project using Japanese-supplied equipment, even though the project failed catastrophically. Germany and the European Union are helping Siemens finance a $4.5 billion high-speed rail project, and so on. 

　　Lenin explained this process in Imperialism: The Highest Stage of Capitalism : 

　　“The increase in output is connected with the fraudulent dealings of finance capital, which, not caring for bourgeois preaching, wants to flay two skins from the same ox: the first is the profit made on the loans, the second is the profit made when the same loans are used to buy Krupp products, railway materials for the Steel Syndicate, etc.” 

　　The word “cheats” is particularly apt, since some of these deals are illegal even by the standards of bourgeois law. Last month, a British judge convicted Credit Suisse and French investment company Privinvest of paying bribes to bankers and officials in Mozambique to secure tuna fishing contracts financed by a billion-dollar illegal loan. 

　　Mozambique’ s workers and poor will be asked to pay back an illegal loan that was signed not only without their knowledge, but even without the knowledge of Parliament, and much of it was simply bribes paid to those who facilitated the deal. When the loan was revealed, it brought Mozambique’ s economy to its knees, costing the economy up to $11 billion and impoverishing two million citizens. Nineteen people are allegedly on trial in connection with the case, but this is not a matter of individual bad guys, but a particularly egregious case of a system built on the systematic exploitation of small states. 

　　If you compare these debt repayments to the size of a country’s economy or the size of its government budget, you can clearly see how unsustainable this situation is. For example, Egypt needs to repay debts equivalent to 30% of its GDP (gross domestic product) or 196% of its government budget every year! 

　　Now, a smart person might say “no government is going to pay back everything they owe, they’ re just going to borrow some new money to pay the interest.” That’ s all fine and dandy if you can find someone to lend you money at a reasonable rate. If not, you'll have to turn to multinational institutions like the IMF, which are really just fronts for Western imperialism, or you’ ll have to make a bilateral agreement with one of the imperialist countries. All of this will come with strings attached, of course. 

　　Interest Burden 

　　Moreover, interest rates themselves have become unaffordable. Higher central bank rates in the United States and Europe have increased borrowing costs for governments. 

　　The worst affected are what the United Nations calls “lower-middle-income” countries, especially places like Sri Lanka, Kenya and Bangladesh. The poorest countries are too poor to borrow money, so the impact is minimal. 

　　The average low- and middle-income country spends 3.7% of its GDP on interest, or about $1 of every $25 generated in the economy. That’s 19.6% of the average government budget in these countries, roughly the same as spending on education or public investment. 

　　“Lower and middle” income is really just another word for poverty and exploitation. These countries, home to 3 billion people, have no future other than continued misery brought on by capitalism and imperialism. 

　　In contrast, advanced capitalist countries may spend huge sums on interest payments, but this is only one-tenth of their public investment spending and one-third of their education spending. On average, these countries spend only 5.3% of their government budgets on interest payments. 

　　The use of debt is one of the means by which finance capital exploits poor countries and keeps them underdeveloped and enslaved. But there is a limit to this, and that limit is being approached. 

　　Countries are defaulting on their loans one after another or having to turn to the IMF. The IMF has tried to impose its usual programs of government budget cuts and austerity, but these programs have not solved the problem. Yet the suffering they are inflicting on the population is inspiring a mass revolt. The workers and poor in these countries have never benefited from these loans, which in many cases have already been repaid many times over. 

　　Tipping Point 

　　Many of the African countries that have notably left France’s sphere of influence in the past few years face similar debt problems: debt services in Niger, Mali, Burkina Faso and Cameroon account for 40-60% of government revenues. Most of their debt is owed to one multinational institution or another, but their former colonial master, France, also accounts for a significant portion, as does China. 

　　Some governments have tried to follow the IMF’s “recommended actions,” which usually mean regressive tax policies (the poorer the poor, making life harder for ordinary people) or cuts to essential food and fuel subsidies. These plans have sparked massive protests in Argentina, Sri Lanka and Kenya. The killing of protesters and mass arrests have not quelled the anger. 

　　Other countries have temporarily resisted the tide through repression, but the heavy-handed responses of their governments have exposed the weakness they feel they have. In this category we can see countries such as Nigeria, Zambia, Ghana, Gambia, Egypt and Uganda. 

　　Pressure is building. The 2008 crisis didn’t hit these countries as hard as the West, in part because low interest rates enabled governments to continue borrowing and trade with China opened up new avenues for investment. But all that is now in the past. The pandemic hit Africa very hard, and the subsequent inflation has led to a cost-of-living crisis that is often worse than in the West. As if that weren’t enough, high interest rates are now crushing government finances, forcing them into another round of austerity. No wonder people are rebelling. 

　　Capitalism does not help the masses, and debt is both a symptom of the problem and a festering wound that keeps them in servitude. Renegotiating debts will not help. Even refusing to pay debts, as we saw in the 2000s, will not solve the problem. 

　　In the post-war period, these countries broke free from the rule of their colonial masters and gained formal independence. But this did not loosen the countless chains that bound them to the finance capital of imperialist countries. The struggle was not carried out thoroughly. 

　　Only by taking the wealth and resources of the country into their own hands can the masses take control of their own destiny. The revolutionary movements we have seen in Sri Lanka, Kenya and Bangladesh show beyond a doubt that the masses are ready to take the next step, which is the path to socialist revolution. There is no other way. 

　　Editor: Zhong Yao  Deng Panyi 

　　From:https://www.marxist.com/the-imperialists-are-bleeding-the-poor-and-the-poor-are-fighting-back-cn-simplified.htm///(2024-9-20)