Hasn't this been sorted?

After Northern Rock we are all suddenly aware of debt in the developed world. For years the stable growth economy of which our prime minister is so proud has been kept going only by individuals and governments taking on more and more debt. Debt, it appears, has been most heavily oversold in the housing market, so much so that a small downturn in employment could lead to large scale repossessions as overextended households find themselves unable to meet repayments. Falling house prices could then lead families facing negative equity sharply to reduce expenditure, so creating a decline in retail sales and employment in the household goods and related sectors. It's already happening in the US, and no one really knows to what extent your friendly neighbourhood listening or otherwise caring high street bank is committed there. The fear is of a classic downward spiral which may devastate lives and prospects until the economy reaches a new balance between production and consumption at a perhaps far lower level of activity.

With so much at stake in the developed world, it's good to know that the 2005 Gleneagles G8 - that's right, the one with "Make Poverty History" written all over it - dealt with the problem of international debt in the developing world. Thanks in large part to the efforts of Gordon Brown, then chancellor, a huge debt relief programme was initiated by the developed countries. A dark cloud lifted from the poorest countries, and their incorporation into the expanding world economy was henceforth only a matter of time.

Why then has October 17th-24th been designated by the Jubilee Debt Campaign (JDC) as "Global Debt Week"? Why are we being urged to lobby our MPs to put the case for debt relief? Hasn't it all been sorted?

Well despite the achievements of campaigners, developing world debt is still astronomical, while relief schemes are slow, inadequate and conditional. According to JDC the total external debt of the very poorest countries (with an annual average income of less than $875 per person) was $412 billion at the end of 2005. In that year these countries paid nearly $43 billion to the rich world in debt service. For all developing countries, total external debt owed at the end of 2005 was $2.8 trillion, and over the course of that year they paid $511 billion servicing it.

And remember where it came from. In the 1960s and 1970s banks in rich countries were flush with cash generated by rising oil prices. Having to find willing borrowers, they lent and lent again to poor countries whose long term prospects of repayment were nebulous (rather like "sub-prime" mortgage lending more recently). Meanwhile many governments in the rich developed world were, as JDC delicately puts it, "keen to support countries that they saw as potential allies in the cold war – so they lent them money regardless of whether that country was being ruled by a corrupt or oppressive regime."

OK, you may say, but after Gleneagles things are moving in the right direction - and now we've got problems of our own. Well let's take Kenya, potentially one of Africa's success stories: in 2005-06 Kenya's budget for debt payments was as much as for water, health, agriculture, roads, transport and finance combined. Kenya's debt was incurred by corrupt elites spurred on by self-interested lenders. Now its people pay the price.

Kenya is not alone: a recent study suggested that 107 countries need debt cancellation to guarantee an "ethical poverty line" of $3 a day for their people.

Click here for more on Global Debt Week