Currently, in various parts of the world, many poor countries rely on foreign loans from several governments and other institutions. Even though they have obtained foreign loans, some of these poor countries still face economic and financial challenges, particularly in repaying their obligations to creditors. This essay will explain a couple of ideas that support public opinion which is states that the debt of poor countries should be write off or get a haircut with some considerations.
The main consideration is humanity, especially in a difficult time such as today all countries should work hand in hand with poor countries because foreign loans are difficult to have a positive effect in the short term in improving their economic and financial condition but increase the burden on them with interest expense to be paid. Moreover, this condition may deteriorate due to the risk of exchange rate volatility where most creditors provide loans in US dollars which have an extremely strong position in the market compared to the rates of currency of poor countries.
Another thing that can be taken into consideration is that some of the poor countries in the world mostly have a lot of natural reserves such as oil and other natural commodities but are constrained by infrastructure that they do not have. For this reason, rather than providing loans with a large interest charge, it would be better if creditors support poor countries to manage their natural resources so that they can build up these poor countries in a better direction and break the poverty disparity.
In conclusion, those reasons may consider for the creditors to write off or reduce the debt of poor countries although it will have some pros and cons.
Currently
, in various parts of the world,
many
poor
countries
rely on foreign
loans
from several
governments
and other institutions.
Even though
they have obtained foreign
loans
,
some
of these
poor
countries
still
face economic and financial challenges,
particularly
in repaying their obligations to creditors. This essay will
explain
a couple of
ideas
that support public opinion which is states that the debt of
poor
countries
should be
write
off or
get
a haircut with
some
considerations.
The main consideration is humanity,
especially
in a difficult time such as
today
all
countries
should work hand in hand with
poor
countries
because
foreign
loans
are difficult to have a
positive
effect in the short term in improving their economic and financial condition
but
increase the burden on them with interest expense to
be paid
.
Moreover
, this condition may deteriorate due to the
risk
of exchange rate volatility where most creditors provide
loans
in US dollars which have an
extremely
strong position in the market compared to the rates of currency of
poor
countries.
Another thing that can
be taken
into consideration is that
some of the
poor
countries
in the world
mostly
have
a lot of
natural reserves such as oil and other natural commodities
but
are constrained
by infrastructure that they do not have.
For this reason
,
rather
than providing
loans
with a large interest charge, it would be better if creditors support
poor
countries
to manage their natural resources
so
that they can build up these
poor
countries
in a better direction and break the poverty disparity.
In conclusion
, those reasons may consider for the creditors to write off or
reduce
the debt of
poor
countries
although it will have
some
pros and cons.