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It Won't Go Away Alone
| Article
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15639 |
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Section : |
CURRENT ISSUES
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| Issue
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2 / 1989 |
2,560 Words |
| Author
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Christopher Kourth
Christopher Kourth is professor of economics at the University
of South Carolina. |
One of the most serious international economic and political problems today is the enormous amount of amount of foreign debt owed by Third World countries. The burden of the debt problem, of course, varies significantly in different less developed countries (LDCs).
Some of these countries have indeed been able to avoid or overcome serious debt problems, thus creating a new category of new industrialized nations. Most of the success stories are in Asia--for example, Taiwan and South Korea. (Indeed, Taiwan has become a major capital exporter, and its government's international reserves are in excess of $70 billion.) However, most Third World countries are heavily burdened by their international debt.
Other LDCs, because of their extreme poverty and very poor credit prospects, share the dubious distinction of never having been able to borrow freely in the international private money and capital markets. Lenders, such as commercial banks and investors in the bond markets, have never found the prospects of returns attractive enough to make loans to these countries. As a result, these countries, "the poorest of the poor," have only been able to borrow from the governments of the wealthy countries and from international agencies, such as the International Development Association of the World Bank Group. Fortunately for those countries, loans from these official agencies are generally made on "concessionary" terms, with fixed, low-interest rates. Included in this group of the very poorest are such countries as Chad and Mali in Africa, Suriname and Guyana in Latin America, and Bangladesh and Burma in Asia.
Middle-Income
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