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To finance development, many poor countries have to take recourse to external loans. By itself this is not bad or dangerous because the debt can be used to , f. i., invest in infrastructure, raising the output of the economy.

But if loans are taken and given without considering the economic capacity of the debtor, the repayment could become a problem. In the 1970s and 1980s this led to the so called “Third World Debt Crisis”. Today we can observe a similar trend: Poor countries in Africa, Asia and Latin America have comparatively easy access to fresh money because low interest rates in the Global North make investments in the Global South very attractive.

Rules for responsible borrowing and lending are important since they make clear, that creditor and debtor share responsibility for the success of the lending operation.

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  • 10.10.2018

    Arguments against a Sovereign Debt Workout Mechanism

    In most countries, if a person or a company is not able to repay its debt, national insolvency laws settle how much the creditors are entitled to. If necessary, the court decides this question - the judge of course has to be impartial. This is not only fair to everyone…

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  • 1.10.2018

    Africa – on the creditors’ hook

    Is Africa once again on the hook of rich creditors and does it steer into a next ­continent-wide debt crisis? The conference on 6 December 2018 centers around dramatically increasing debt indicators in lots of African countries. There will be simultaneous German/English translation. Participation is free, registration is requested.

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