The Third World debt crisis—why a radical approach is essential

Abstract

The third world debt crisis is in its 17th year and most Heavily Indebted Countries (HIPCs) are more heavily in debt than when the International Monetary Fund and the World Bank began their ‘debt relief’ programmes. But, over the past four years, progress towards the eradication of developing countries’ debt burdens has been considerable, and optimistic forecasts have been made for the levels achieved. But examination of the actual prospects for the four countries in the first wave of relief, and of the further six in the second wave, gives grounds for concern that, despite the initiative, a heavy debt burden will remain. And 41 countries included in the initiative have seen any benefits in its first two years wiped out by interest rate increases.