A government deeply in debt is limited in it ability to implement public programs that would benefit the young and old by providing services such as education and health care. Photo: Matthew DeGalan/Mercy Corps

Recently, international creditors forgave almost $20 billion in foreign debt amassed by the Democratic Republic of the Congo. The debt was mostly accumulated under the former president, Mobutu Sese Seko, and is considered odious debt as the money was used for the President's personal amusement rather than for the benefit of the populace.

The timing of Congo's debt relief is fortuitous as the country's economy needs as much help as it can get. The country consistently lands near the bottom of the World Bank’s “Ease of Doing Business” rankings and is plagued by persistent internal conflict.

But maybe the DRC just got its big break: escaping the chains of debt may allow the country to take the first steps towards economic development and progress. The head of the central bank and monetary policy committee, Jean-Louis Kayembe wa Kayembe, certainly thinks so.

[The] cancellation of the debt which have a positive impact on central bank reserves and will also allow the state to create budgetary space...for the battle against poverty and for infrastructure, given a durable growth for the wellbeing of the population.

There are some concerns about corruption, governance and human rights abuses in the DRC. Critics argue that debt cancellation should have been used as leverage to encourage reform in the country. However, debt relief should allow for some improvements in the government's ability to implement more progressive and pro-poor policies.

In 1978, the poor West African country of Liberia borrowed $6 million from a New York bank. The Liberian government promised to use the money to buy and develop an oil refinery, and to pay the money back in seven years.

Today it's not clear if either of those things ever happened.

Two years after the loan, the Liberian government was overthrown in a coup, which later led to a 14-year civil war. Meanwhile, the loan was bought and sold several times, according to allAfrica.com.

But now two investment funds say they hold the note and are entitled to $20 million from the current government of Liberia — a claim upheld by a London court. Today Liberia is led by a democratic government whose president is working with the IMF and World Bank to settle old debts. The Guardian says Liberia struck deals with most of its private-sector creditors, but these two funds are refusing to settle, demanding full payment through the courts.

A representative for the Jubilee Debt Campaign, a coalition fighting for debt relief for the world's poorest countries, accuses funds like these of "profiting from poverty."

As Al-Jazeera's Barbara Serra reports:

So-called vulture funds have been condemned by several governments for preying on the world's poorest states. They buy up the debt of near-bankrupt nations at a cheap price from financial institutions. They then sue those nations in international courts for the full value of the debt, plus steep levels of interest and penalty charges. Every year, developed countries spend billions of dollars to help pay off the debts of poorer nations, but vulture funds siphon off that money for themselves.

Even the lawyer for Liberia says this is a moral issue as well as a legal one. Get the full scoop from this Al-Jazeera video: