Retiring Destabilizing Debt

 

Preferred State: Economically stable/growing set of opportunities for 100% of humanity

Problem State: Least developed countries owe close to $300 billion

Strategy 8: Debt Retirement and Debt for Nature

Over the past few decades, numerous nations, particularly in Africa and Latin America, funded their development projects through loans from the banks of industrialized nations. Debt and interest payments from these loans from the world's least developed countries today amount to $199 billion per year.(98) This is three times the total amount of aid received from the developed countries.(99) After many development efforts failed, in large part as a consequence of low commodity prices that reduced the earnings of many developing countries, the debts remained, stifling productivity and creating an impediment to further investment in the future.

A comprehensive debt retirement program will enable debt-stricken nations to meet or renegotiate their repayment schedules, thereby avoiding default on their debts. A lack of confidence in the ability of many nations to repay their debts has precipitated a devaluation of these outstanding debts on world markets. Devaluation of developing nations' debts has given rise to an opportunity to retire substantial amounts of debt at a fraction of their face value.

By investing an average of $30 billion per year for ten years on retiring $500 billion or more of current debt discounted to at least 50% face value,(100) developed countries can succeed in returning the heavily indebted nations of the developing world to a position from which they can afford to repay their remaining debts and make strategic investments that will strengthen their economies and produce the growth needed to provide jobs and additional revenues.

With some developing nations paying 30% to 40% of their foreign exchange earnings on servicing debts, they are not in the position to import goods from developed countries. The US, with its enormous trade deficit, would stand to gain by any reduction in the international debt crisis that increased its customers buying power. More than the bankers, it is the manufacturers of the developed world that are suffering the consequences of the developing world's debt.(101)

Costs/Benefits

By using the $30 billion per year to purchase discounted debt and retiring it with the agreement from the debtor country to preserve a given section of natural resources-for example, a tract of rainforest-the double objective of environmental preservation and debt reduction can be accomplished.

The amount needed to retire the major portion of the developing world's debt is about 13% of the annual interest payments on the US government's debt, or 3.8% of the world's total annual military expenditures.

Benefits include more stable national economies better able to attract outside investment, more revenues from internal sources for investment in social programs, expansion of the economy, more jobs, increased standard of living and social stability and more international financial stability.

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Eighteen Strategies...

...for tackling the major problems confronting humanity:

1. Eliminate Starvation and Malnourishment >
2. Provide Health Care & AIDS Control >
3. Provide Shelter >
4. Provide Clean Safe Water >
5. Eliminate Illiteracy >
6. Provide Clean, Safe Energy: Efficiency >
7. Provide Clean, Safe Energy: Renewables >
8. Retire Developing Nations Debt
(current page)
9. Stabilize Population >
10. Prevent Soil Erosion >
11. Stop Deforestation >
12. Stop Ozone Depletion >
13. Prevent Acid Rain >
14. Prevent Global Warming >
15. Remove Landmines >
16. Refugee Relief >
17. Eliminating Nuclear Weapons >
18. Build Democracy >

*Sources:
The What the World Wants Project is by Medard Gabel and the research staff of the World Game Institute. The material in this section of Media Hell is quoted directly from that research. Credits, Major References & Footnotes >