Debt Relief Case Studies: Guyana and Uganda

Guyana

Problems before debt relief:

• The low income of the population meant many couldn't afford private healthcare - due to large amounts of debt the government was unable to fund free healthcare 
• $2.1 billion of debt by the late 1980s 
• Investment in social services impossible - almost all of revenue went to servicing debt 

Solution = Guyana, Uganda and another 33 countries receiving >$117 billion of debt relief

Benefits of the debt relief:

• Freed up budget resources for government - able to plan it's expenditures better
• Guyana reduced interest payments by $60 million a year and increased social spending by >25%
• Over 20% of GDP on health, education, housing, water and sanitation - more modern and efficient education/healthcare system
• The government in Guyana decided to provide free healthcare after the country's debt was re-structured

Uganda

Problems before debt relief:

• Had to typically spend >20% of export revenues on falling debt a year - now, due to debt relief, it is around 5%
• Unable to sustainably handle debt

Solutions = Guyana, Uganda and another 33 countries receiving >$117 billion of debt relief

                = Receiving >$3.7 billion in multilateral debt relief

Benefits of debt relief:

• Able to spend more in agricultural sector
• Biggest benefit = upgrading of roads to 'all-weather' standards - farmers able to bring produce directly to markets to get more money (able to rent a small truck and bring goods to cities where they will be in higher demand) - generates more income and improve welfare of the people
• Uganda's rural transport budget has doubled over the past decade to $15.5 million a year 
• Poverty reduced from 56% in 1992 to 38% in 2002