WASHINGTON, April 22: The heavily indebted poor nations of the world are actually financing the US deficit, says a report by an offbeat think-tank, New Economics Foundation, released to coincide with the World Bank-IMF spring meetings here.

A summary of the report says the US alone owes almost as much as all of the developing world put together, including India, China and Brazil, yet pays a fraction of what they do to service its debt.

The summary says the US has built up a massive external debt of $2.2 trillion, almost equal to the combined debts of all developing countries ($2.5 trillion), and pays only $20 billion per annum to service this debt while the poor countries are crippled by over $300 billion in debt service payments.

In fact, the report charges, the developing world is financing America’s accumulated deficits by capital flight and by the forced holding of US dollar reserves. “Poor countries borrow funds from the US at rates as high as 18 per cent while at the same time lending to the US (through the purchase of treasury bonds) as low as three per cent. “ The reason they are forced to purchase US treasury bonds is to maintain excessively high levels of reserves as insurance against speculation and financial instability.

The report shows that for many countries, capital flight is just the “flip side of external debt”. If capital flight were to be included in official statistics, then at least 25 African countries would be net creditors to the West.