SOSC 2800 Study Guide - Final Guide: Participatory Rural Appraisal, Heavily Indebted Poor Countries, Debt Relief
28 Nov 2013
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Document Summary
Banks or lending agencies encourage borrowers to take loans they do not need or cannot afford to pay back. The 1970 s saw a mania period with a sharp increase in loan pushing to developing countries. With the panic, lending suddenly stops, borrowers cannot repay, and they default. International development lending has two phases: in the growth period lending can be profitable and promote productive investment and growth. Borrowing by developing nations can accelerate industrialization: but in the mania and loan-pushing phase, when bankers are high-pressure salesmen of money, poor countries take unproductive loans they cannot repay. Debt cancellation involved three groups of creditors: the paris club. Which comprises most bilateral government lenders: london club. Banks and commercial creditors: imf, wb and other development banks. The imf and wb handled the negotiations and demanded that developing countries follow strict neoliberal structural programs. During the first two years there was no debt cancellation.
