The debt burden of developing countries

Abstract

According to OECD data¹, the external debts of developing countries totalled $ 625 billion at the end of 1982. As this does not include certain forms of credit, their indebtedness can be estimated at more than $ 700 billion, of which $ 500 billion consists just of bank loans. The resultant burden of interest and redemption payments has become so great that many more developing countries will be forced to seek rescheduling in the future. The debt burdens of developing countries and the vulnerability of the world financial system must be reduced for development policy reasons and also to ensure that the economies of the industrialised countries are not harmed. The following study suggests how this may be done.