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How poorer countries get into debt.
How debt can affect people and the environment
Central America used to have about 500,000 km[2] of rainforest. By the late 1980s, more than 80 % of it had gone. Every year, more than 800 km[2] of rainforest are cut down in Honduras - to be replaced by ranches, banana plantations and small farms.
The connection between the rainforest and debt:
* The trees that are cut down provide hardwood. This is sold overseas to earn foreign money to repay Honduras's debt.
* The new fruit plantations are also earn money to repay debt.
Every year, 20% of the money Honduras earns from exports is spent on debt repayment.
Cancelling debt
In July 2005, at a meeting of the G8( the world's eight richest countries) , an agreement was made to cancel all debts (worth $40 billion) owed by 18 Highly Indebted Poor countries (a group of 38 of the poorest countries with the greatest poverty and debt, include Uganda and Honduras).
However, two conditions had to be met before the debts were cancelled:
* Each government had to show that it could manage its finances, and that it wasn't corrupt.
* It also had to agree to spend the saved debt money on education, healthcare and reducing poverty.
By 2008, 27 of the 38 HIPC countries had met these conditions, and had had $85 billion of debt cancelled. But African countries still owe $300 billion, and there's little chance that they will be able to repay it.<...
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