A large portion of the global population still lives well below the poverty line. Majority of these people are in third world countries which as a whole are failing to meet the basic day to day needs of their citizens. Many of these countries are engulfed in so much debt that they are unable to repay them; effectively crossing their deadlines, which results in penalties and an increase in the interest that they have to pay. This has essentially placed these countries in a position where they get themselves deeper and deeper into debt and seem to have no way of escaping.
The cause of poverty in third world countries
The causes of the poverty are many. Some of them are drought, famine, disease and poor health care, misappropriation of funds, war, poor industrial development, mismanagement of resources, a high percentage of illiteracy, etc. These factors have prompted these countries to get loans from the more affluent nations. The debtor countries are often unable to repay their debts and end up with huge sums if debt rendering them unable to make economical progress.
The interim solution
Many of the governments of these countries and other NGOs have pushed and are pushing for debt relief to be provided. This international debt relief does not differ in principal from the national debt relief that’s accessible in some countries at a local level (National Debt Relief information can be found on various sites on the web for your further understanding of how the system works). From time to time this is given, depending on several factors such as size of the debt, poverty level, relationship between the creditor and debtor nation etc. But this is only an interim solution. It may alleviate some of the debt temporarily but history has shown that it’s not a lasting solution.
Long term effects of debt relief
Many people have argued that debt relief encourages laziness and the poorer nations to deliberately withhold payment of their loans. They also argue that nations tend to borrow more than they need since they know that they won’t have to pay it off. This in turn is causing some of the debtors to mismanage and abuse the some of the money they loan. The end result is that no major development takes place and the status quo remains. We can therefore conclude that debt relief is not a complete solution and there’s need to find ways to empower and equip these nations with the right tools to get themselves out of debt.