- 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
MDG8 calls on development partners to work together to ensure trade is fair, heavily indebted countries receive relief, funds are available to tackle poverty, essential drugs are available and affordable, and poor countries benefit from new information and communication technologies. In 1996, the World Bank and International Monetary Fund launched the Heavily Indebted Poor Countries (HIPC) Initiative so 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. For the 36 countries that have benefited from debt relief, expenditures on health, rural infrastructure, education and other needs increased on average from 6.5% of GDP in 2001 to 10.4% of GDP in 2013.
- 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.
The World Bank Group helped developing countries cope with the effects of the 2008 financial crisis and continues to support developing countries in the face of ongoing economic uncertainty, increasing trade-related lending from $1.9 billion at the end of FY12 to $2.7billion in FY13.
Over 74% of the over 1,700 projects in the Bank’s active portfolio now have ICT components – expanding from about $500 million in 2006 to approximately $1.7 billion in 2014 . Since 2001, the IFC has invested about $4.5 billion and mobilized an additional $2.7 billion of financing in private ICT sector projects in developing countries. In addition, the Bank’s investments helped catalyze over $454 billion in private sector investments in ICT in low-income countries between 2005-2011, according to the PPIAF Telecom Sector Database.
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 $2.6 billion a year between 2002 and 2010 to an average of $4.4 billion a year in 2011 and 2013.
The International Finance Facility for Immunization (IFFIm), for which the World Bank serves as treasury manager, has raised more than $4.5 billion on capital markets since 2006 to fund immunizations in the poorest countries.
- Afghanistan: 18 million people had access to a phone in 2012, up from just 57,000 functioning phone lines in 2002.
- Burkina Faso: Child mortality decreased to 104 deaths per 1,000 children in 2009—half the rate of 1999.
- Cameroon: 7.2 million urban dwellers had access to better water sources in 2012.
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.
- 6billion mobile cellular subscriptions worldwide by the end of 2011.