How Should International Debt be Rectified in Ghana? Essay
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How Should International Debt be Rectified in Ghana?
International debt is a modern geographical issue which has sparked much controversy in the past and continues to affect our global community to this day. Through this essay I aim to analyse contrasting viewpoints and conclude with my own perspective of the current situation, having digested the main arguments.
The debt crisis originated in the 1970s due to considerable increases in oil prices. Developing countries were forced to borrow extortionate sums of money from the developed worlds financial institutions, who were keen to take advantage of such countries vulnerability. The lending continued as Third World countries were forced to borrow…show more content…
In an attempt to support Ghana and various other indebted countries, the bank worked in conjunction with the International Monetary Fund (IMF) to produce the Heavily Indebted Poor Countries (HIPC) initiative. The initiative is a unique approach to tackling international debt, targeting Third World countries with the lowest debt sustainability (repayment capabilities). The aim is to ensure that Third World nations are not faced with debt which they can't afford to pay and that the funds released through the initiative are channelled into vital sectors such as education and health care. Bilateral creditors and multilateral lenders cover the expense incurred from the scheme.
However, such an attempt at debt relief has been scrutinised by various charity organisations such as Christian Aid. They believe that although the HIPC initiative is good in principle, the World Bank could be doing more in the way of international debt relief. Another criticism Christian Aid has of the HIPC is that only countries affected severely by debt qualify for the scheme, this is a mere 26 countries. Ideally the boundaries should be expanded further to help larger numbers of the world poorest nations.
Through the HIPC initiative, in February of 2002, Ghana signed a debt cancellation deal with IMF and The World Bank worth $3.7