Friday, October 25, 2019

Assess some of the ways in which Third World Debt might be reduced. Ess

Assess some of the ways in which Third World Debt might be reduced. Despite the overwhelming number of statistics and indicators, global poverty is as hard to measure as it is to conceptualize. One fact is undeniable: someone is going to have to pay for past debts. It could be the people in debtor countries, or the banks, or the people in advanced industrial countries. Most likely it will be some combination of these three groups. In the last ten years, there have been a variety of proposals which, unfortunately, usually reflect only the special interests of the groups proposing them. Generally speaking, these solutions fall into three categories: repudiation, minor adjustments in repayments, or reduction. A report â€Å"Relief Works: African proposals for debt cancellation - and why debt relief works† examines public spending in 10 African countries which have benefited from debt cancellation. It reveals that total spending on education in these countries has increased, and is now twice the amount that is being paid to foreign creditors. The story is similar with spending on health, which has risen by 70 per cent since before debt relief, and is now one third higher than spending on debt repayments. And contrary to the views of sceptics, debt relief is not being used to fuel military expenditure. The report presents these clear indications of the positive difference that debt cancellation can make as the strongest argument there is in favour of further debt relief for the world's poorest countries. However, various G8 Summits have seen promises of billions in debt-write off, but almost hardly are carried out, or contain a lot of spin. For example, a lot of debt relief promised may include moneys previously annouced for such purposes, thus creating an impression of enormous write-offs. Bilateral debt relief also does not typically release actual money to be used for other purposes. Multilateral debt relief, however, could. Debt repudiation, in the sense of a unilateral cessation of repayment, occurred in a number of countries: Bolivia, Brazil, Costa Rica, Dominican Republic, Ecuador, Honduras, Nicaragua, Panama, and Peru. With the exception of the Peruvian cessation, however, most of these actions have been taken with assurances that the stoppages were only temporary. Peru announced that it was unilaterally limiting its ... ... and abysmal poverty as a normal condition. This need not, and should not, be the case. The developed countries have a responsibility to create conditions whereby the poorer countries can interact more productively in international economic activities: their single most important contribution to this end might be in the area of reducing trade restrictions on the products of poorer countries. Similarly, the developing countries have a responsibility to see that money is more effectively utilized within their own borders. The obscene personal profits accumulated by such leaders as Marcos of the Philippines and Mobutu of Zaire should not be fostered by the strategic interests of other countries. The banks should also face up to the fact that their single-minded pursuit of profits almost led them to the brink of bankruptcy. The lesson to be learned from this experience is that for economic growth to be sustained, close attention must be paid to the mutual interests of all parties involved. Only after sustained economic growth returns to the heavily indebted countries can the international community even begin to determine manageable rates and methods of debt repayment.

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