“The case for debt cancellation on the grounds that vast loans were made to odious regimes, and should not be enforceable under international law, is gaining momentum. But until now, less attention has been given to how the repercussions of odious debt reverberate for many decades after an oppressive and corrupt borrower regime may have left the scene. Not only are successor governments saddled with paying off the loans, but because the borrowed money was often not put to productive use, there are inadequate funds to repay interest and capital. The result is a vicious circle of debt in which new loans have to be taken out by successive governments to service the odious ones, effectively ‘laundering’ the original loans. This defensive lending can give a legitimate cloak to debts that were originally the result of odious lending.

This New Economics Foundations (NEF) research paper demonstrates the impact of odious debt, and how the impact continues to grow until the loan is cancelled. We also outline a proposal to address the problem of the original odious lending.

Long after odious debts are technically off the books, subsequent generations are still effectively paying for them. This research paper examines 13 clear cases that present a picture of the extent and impact of odious lending.”

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