Many of these nations have fragile industries, and mostly agrarian societies. They depend heavily on cash crops such as cotton. Thus the GDP is relatively small and subject to fluctuations, pending on the international market. Conditions such as these make it difficult for the third world governments to make the interest payments, let alone make payments on the actual principle. This entraps them in a never-ending cycle of debt.
Many of the creditors were motivated to lend the money to secure allies during the Cold War, or to invest the wealth of the OPEC nations that had been deposited in their banks. The ruling class and government officials of the debtor nations still enjoy a life of luxury, but the victims here are the average citizens. The ordinary working class citizens have had to bear the consequences of these loans, although they have had no say in the decisions to incur the loans. It is only fair that the citizens of these countries be relieved of a burden that is not theirs. Even policies such as the Brady Plan have not given any respite for those who must suffer from the brunt of the blow.
It is certain that the third world’s conflicts lay deeper then simply the debts they owe. Although, it is also certain that without the added impediment of the debts, these nations lay in a far better position to deal with issues such as education, healthcare, and development of their social infrastructures. The countries of sub-Saharan Africa spend larger sums on their debt payments then they do then they do on vital government services. Honduras, a country in wherein half the population resides in abject poverty, spends more money on debt repayment then on health and education combined. It is blatantly obvious to see that the cancellation, if executed in a manner that will benefit the ordinary citizens, can incur drastic changes in the lives of millions.
Many right wing professionals have put forth a brilliant solution to end third-world debt. One that consists of seizing assets of an equivalent value to that of the loans. By surrendering mining rights, crown land, stakes in crown corporations, and other government assets, the creditors would be allowed for a direct and outright take over of their country. This does not help the cause of enlightening the burden of those who are oppressed.
Therefore, it can be concluded that in an attempt to alleviate the sufferings of millions and to benefit the international economy, it is necessary to cancel third world debt. Countries such as Peru and Mexico have been unable to repay their loans and have declared bankruptcy. If more countries follow suit, a collapse of the entire world financial system is eminent. Urgent and immediate measures must be taken to prevent such a catastrophe.