Problem
Defaults on international loans
Other Names:
Debt repudiationArrears in international debt payments
Nature:
Defaults on international loans may take several forms: repudiation of old loans by new governments swept into power during economic crises; failure to earn or unwillingness to expend foreign exchange to effect the transfer despite the fact the revenues are available in the domestic currency; and failure to collect sufficient revenues to cover debt service even when current expenditures have been drastically reduced (namely bankruptcy of the borrower).
Incidence:
It is estimated that by the end of 1990 15 developing countries will owe about $524 billion to banks and governments, with nearly another $50 billion in interest payments falling due.
Broader Problems:
Unpaid debtsGovernment loan defaultsEconomic underdevelopmentArrears in payment of government financial commitments Narrower Problems:
Debt induced environmental degradation Related Problems:
Circumvention of duties and assessmentsIrregular payments of international financial obligations Aggravates:
Global financial crisisExcessive anxiety on overseas lendingInsufficient national creditworthinessBurden of servicing foreign public debtInadequacies of the international monetary systemRestrictive conditions on loans through intergovernmental facilities Strategies:
Providing loans for urban developmentProviding loans for communicationsProviding loans to fisheriesProviding loans for the environmentProviding loans to the transportation sectorProviding loans to agricultureProviding loans for planning and reformProviding preinvestment loansProviding loans for educationProviding loans to industry/miningProviding loans for tourismProviding loans for export financingProviding loans for national institutional changeProviding loansCancelling international debtPaying off foreign debtDefaulting on loansDefaulting on time payment agreements References:
United Nations Centre on Transnational Corporations: Issues in Negotiating International Loan Agreements with Transnational BanksGiersch, Herbert: International Debt Problem: lessons for the futureAggarwal, Vinod K: International Debt Threat: bargaining among creditors and debtors in the 1980sCampbell, Barry R and Herzstein, Robert E: The International Debt Problem and Its Impact on Finance and TradeRes, Zannis and Motamen, Sima: International Debt and Central Banking in the 1980sKahler, Miles: The Politics of International Debt Problem Type:
D: Detailed problems Date of last update
04.10.2020 – 22:48 CEST