Multilateral debt owed by the poorest nations of the Third World has mushroomed over the past decade. Extremely high interest rates have also driven up the total owed. Unable to pay off or default on old loans, developing country governments take on new loans and the debt spiral deepens. New loans, earmarked for projects or programmes to reduce poverty or to provide for economic development, are sent back to the industrialized North to service old debt principle and interest. As a condition for the receipt of new loans, governments must implement harsh economic measures which result in deepening poverty, social unrest, and environmental destruction.
SAPs also force Southern governments to sell natural resources to pay debt.
Much of this wealth is extracted from indigenous peoples territories without recognition of their rights. The push to generate fast dollars accelerates resource extraction and commodity production beyond ecologically sustainable rates. Deforestation, land degradation, desertification, soil erosion and salinization, biodiversity loss, and air and water pollution are only a few of the long-term environmental impacts of SAPs. Over the years, attempts have been made to 'tinker' with multilateral debt through rescheduling payments and reducing interest rates, but Northern donor nations have lacked the political will to halt the debt spiral, and some have even denied its existence until recently. Washington D.C. Any proposal to cancel, or at a minimum, significantly reduce, the multilateral debt in Third World countries will be met with strong resistance by some donor countries and the institutions themselves.