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International debt - how should it be rectified in Ghana

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Introduction

West Calder High School Centre Number: 5502330 Advanced Higher Geography Unit 3: Geographical Issues Critical Evaluations Barry McGonagle Date Of Birth: 17.10.85 Candidate Number: 990875448 Barry McGonagle, Candidate Number 990875448 West Calder High School, Centre Number 5502330 Advanced Higher Geography Unit 3: Geographical Issues, Critical Evaluation 1 International debt - how should it 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 more to pay back outstanding debt repayments and a further increase in oil prices in the early nineties saw many countries fall into irreconcilable amounts of debt. Figure 1: Map of Ghana's location (adapted from The Africa Debt Report, Page 21) ...read more.

Middle

Although the HIPC scheme requires governments to utilise the monetary benefits in abolishing poverty within the country, the fact that there is no social input to how the money should be used worries much of Ghana's poor inhabitants. The decisions on how to tackle the countries poverty are made by the government upon consultation with IMF and The World Bank; this makes a social analysis seem irrelevant. Even though the HIPC initiative has been subject to much criticism the World Bank maintains that it is doing its utmost to help Ghana out of its current debt predicament. Despite demands from Christian Aid to simply cancel larger amounts of the debt, the bank argues it has done as much as it possibly can. Operating as a business means the bank must adopt the most basic of business principles. This includes protecting the shareholders interests and ensuring they receive an adequate annual dividend. If the bank were to eradicate larger amounts of Ghana's debt and the then eventually the business would be forced into liquidity. The bank's liquidity would have huge implications on the global market and Third World countries would have to look elsewhere to find financial aid. ...read more.

Conclusion

In my opinion organisations such as the World Bank initially exploited the poorer nations financial fragility for their own benefit by offering loans disguised with low interest rates which were to rapidly increase once the amount had been agreed. I feel there must have been some degree of deception involved in the initial lending process, as I don't believe so many astute Third World governments would enter into agreements which they knew they could not fulfil. Much of the information I found on the World Bank contained an element of bias. The articles from which I extracted much of my information were written by directors and senior members of the bank, who will almost indefinitely be shareholders. The fact that less debt relief would mean higher profits and therefore higher dividends I feel would influence their perspectives when writing articles regarding the Third World debt crisis. In order to balance my essay I made use of the Guardian newspapers articles concerning debt in Ghana, as I felt they were written in such a way that all points were portrayed clearly and accurately without bias. Sources www.worldbank.org www.jubliee2000uk.org www.christain-aid.org.uk www.guardian.co.uk/debt Bradley. E & Cunningham. R Core Themes In Geography: Human Oliver & Boyd Various Authors The African Debt Report Jubilee 2000 Coalition Page 21 Word Count: 1, 459 ...read more.

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