Debt has been the major cause of extreme poverty in many countries of the world for a long time. These countries include most African and Latin American countries, in which hundreds of millions of people live off less than $1 per day. The reason for this unpayable debt was rich western governments lending large amounts of money to dictators who misused the money and now the countries cannot pay it back due to a reduced price on exports. One important thing was done lately to try to stop the problem. Under the Heavily Indebted Poor Countries (HIPC) Initiative, all creditors agreed to jointly reduce the debt burdens of the worst affected countries to a "sustainable" level where debt repayments are less than 20 to 25 percent of export earnings. This has helped many countries, but some are already in unsustainable debt again.
Australia has made a big step to help HIPC.
In 2001 it collected over 400,000 signatures in the Jubilee petition, in which a total of 24 million petitions were collected from around the world. In spring of 2001 the Australian government said it would cancel 100 percent of all debts owed to it by Nicaragua and Ethiopia. This makes a tremendous impact on Ethiopians because the average income in Ethiopia per year is $100! Nicaragua owes Australia $6.3 million and Ethiopia $12.7. These countries spend much more on repaying debt than on education and medical care. In being so involved in other countries' economic problems, Australia is greatly improving the lives of hundreds of millions of people who are stuck in the slavery of their debt burden, knowing they would never have been able to repay it.