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.
119 countries in the Global South are critically in debt. The debt trend continues: in 87 of these countries, the situation has worsened in the last four years. 13 countries have ceased payments to creditors. These are the results of the Global Sovereign Debt Monitor 2018.Mehr lesen ...
Every eleven years, the small island states in the eastern Caribbean are hit by category 5 hurricanes following the Saffir-Simpson Hurricane Wind Scale. Last year, the hurricanes ‘Irma’ and ‘Maria’, measured with a wind velocity up to 300 kilometres per hour, caused destruction of more than double the annual economic…Mehr lesen ...