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Causes Of Debt Crisis In Tanzania

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Debt Crisis in Tanzania
Numerous developing nations worldwide are in debt, causing both financial and humanitarian issues, resulting in being unable to pay for their citizens’ basic needs. These basic needs include accessibility to sanitary water, healthcare and education. Debt in developing countries such as Tanzania got rapidly out of control in the 1970s and 1980s. This was when developed countries such as United States, United Kingdom and Saudi Arabia lent out billions of dollars to less developed countries, like Tanzania and Nigeria, at floating interest rates to increase the lenders’ revenue. This eventually led to the loaner falling into a debt crisis.
As developing counties were struggling financially, developed countries used it to their advantage in order to make more money. Developed countries, like the United States, did this by loaning out large amounts of money in their currency (USD) to developing countries, like Tanzania. This benefitted the United States as the value of USD was rising, the value of Tanzanian shilling was decreasing, which ended up being a larger amount of debt than the one initially owed. Tanzania in 1986 owed approximately $3.9 billion to lenders. By the end of 1992 Tanzania owed over $6 billion. This monumental amount of debt owed for a developing country like Tanzania is near impossible to repay. Thomas Sankar, president of Burkina Faso says, “The debt cannot be repaid. If we do not pay, our creditors will not die. We can be sure of that.
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