Why not cancel all third world debt, Business Economics

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Why not cancel all third world debt?

Two arguments are advanced in opposition to debt cancellation.

• Developed countries finance the World Bank which can use its funds to create future loans or deny existing debts but not both.
Debt cancellation diverts funds through future investment into less developed countries.

• Reducing debt does not essentially signify a reduction in poverty. Devoid of good governance, funds might be misused or misappropriated or the benefits not extensively distributed.

• Loans quite than grants impose discipline onto a borrowing country. Stopping debts encourages reckless future borrowing.


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