Shortly before his assassination in 1987, Burkina Faso’s president, Thomas Sankara, issued a warning. Rich nations, he said, were deftly deploying debt to control the developing world. Sankara urged a united front against Africa’s creditors — the only way to fight back against the “technical assassins” of private creditors and multilateral lenders that had handed out money to unscrupulous leaders and then demanded steep cuts and sacrifices to ensure repayment, all in the guise of helping poorer countries. “Debt is a skillfully managed reconquest of Africa, intended to subjugate its growth and development through foreign rules,” Sankara told the assembled delegates of the Organization of African Unity.

Earlier this month, also in the guise of helping poorer countries, the International Monetary Fund (IMF) concluded a review of its deal with Burkina Faso. “The authorities are progressing in their fiscal consolidation efforts,” the IMF announced, with an approving nod to “the creation of fiscal space for priority spending.” In other words: the financial colonization of the world is back on track.

Sankara is long dead, but the system he railed against nearly forty years ago has only become more dominant. In a UN Trade and Development (UNCTAD) report earlier this year, the organization put the total debt burden of the developing world at $29 trillion dollars, a sum unlikely to come down any time soon as nations face high borrowing costs and as climate risks loom.

Sky-High Interest Rates

Part of the problem is sky-high interest rates, which raise borrowing costs for countries selling debt right now. In a quixotic bid to tame inflation, developed-nation central banks from the Federal Reserve to the Bank of England have opted to keep these benchmark lending rates elevated and — for now at least — stuck there, forcing countries that want to attract investors to offer similarly elevated returns.

And those borrowing costs are showing up in the data. A combination of rates and mounting debt burdens has pushed annual interest payments to a staggering $847 billion, according to UNCTAD — a direct transfer of wealth from government coffers to (mostly) private investors. That’s double what it was a decade ago. UN data shows that fifteen nations spend more on interest payments than they do on education. Meanwhile, forty-six spend more on interest than they do on health.

Loan Shark–Infested Waters

Fortunately, when countries fall into debt distress, there’s a fail-safe. Unfortunately, it’s the IMF.

While the IMF frequently downplays its history of demanding deep spending cuts that sacrifice the poor for the good of the market (indeed, the IMF’s own internal research shows that such “structural adjustment” policy is counterproductive), the practice never really ended. In an Oxfam analysis released last year, the advocacy and research group found that for every dollar the IMF encouraged governments to spend on public services, it told them to cut six times as much through austerity measures. Late last year, Oxfam also calculated the total cost: over half of the world’s poorest countries will have to cut spending by a total of $229 billion over five years.

For developing nations, the upshot of all of this is that as debt burdens grow, they’re forced into belt-tightening austerity to pay back investors. When the debt burden gets too high, they’re forced into an IMF loan, which in turn forces them into more austerity to pay back investors yet again. When a dramatic economic crash follows, the IMF loans may roll over and the terms may get stricter as the IMF becomes a de facto insurance policy and enforcer for private investors.

The IMF did not respond to a request for comment for this story.

The Private Market

Another piece that makes the issue so intractable is those same private investors. Whereas previous global debt relief efforts could write off bilateral debts (that is, country-to-country loans) and get rid of a good chunk of debt for the poorest nations, the debt crisis of 2024 isn’t so simple. Now, most developing-nation debt is held by private creditors who are universally unwilling to sacrifice a cent more than absolutely necessary.

The UN estimates that 61 percent of outstanding debt across developing nations is in private hands. Latin America is in the worst shape on this measure — fully 73 percent of the region’s debt is held by private investors. That makes negotiating a meaningful, large-scale end to the debt hangover challenging, verging on impossible.

None of this has escaped notice in Latin America itself. Just last week, marchers overturned cars and hurled Molotov cocktails in violent clashes on the streets of Buenos Aires to protest President Javier Milei’s brutal austerity measures (Milei, who named the dogs he cloned after libertarian economists, often showed up at campaign rallies brandishing a chainsaw and promising to slash spending). The Argentine demonstrators have joined a wave of anti-austerity movements across the world, from Kenya to Pakistan, as the reality of unpayable debt burdens bites harder.

Halfway Measures

Unsurprisingly, the road ahead is littered with halfway measures. UNCTAD, for example, recommends everything from “make the system more inclusive” (symbolic and mostly meaningless) to “create an effective debt workout mechanism.” Any number of such mechanisms in virtually any combination would help: reforming the IMF and eliminating the unhinged system of surcharges, changes in credit rating company approaches that raise the cost of debt, and simplifying negotiations for countries in severe debt distress would all benefit the poorest nations. But it’s still not enough.

The solutions that would meaningfully change things — a massive debt forgiveness campaign, reparations for centuries of colonization, and a fundamental rewrite of the world’s financial architecture and trade rules — appear laughably far off. Some activists, however, retain a small degree of hope.

Jason Braganza, the executive director of the African Forum and Network on Debt and Development, says that he senses a debt reckoning ahead that will require some kind of forgiveness campaign.

“I feel that we’re not far from a moment of debt cancellation, but on a case-by-case basis,” he said in an interview with Jacobin, adding that the demands of climate change will only make the situation worse. “If we don’t fix the structural, systemic challenges, then we are going to start seeing countries saying, well, we cannot finance each other, we cannot finance a transition. We need cancellation.”