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Cancelling Debt Relief Essay

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Cancelling debt relief

Academic year
2012-2013

Table of Contents:

1. Introduction ……………………………………………………………………………..3

2. Our Position………………………………………………………………………………4

3. Opponent position & critic opponents…………………………………..…6

4. Our solution………………………………………………………………………………7

5. Objections of our solution & strength our solution…………………8

6. Restate our position & Conclusion……………………………………….…9

7. References………………………………………………………………………………10

Introduction

According to the World Bank in 2011, with 47.5% African population earning an average of 1.25 dollar per day (1), Africa is known as one of the poorest regions in the world. The question that raises up is “what causes poverty?”. Besides corruption, poor infrastructure and diseases, foreign debt is one of the primary factors constraining recovery and development of this continent. African countries debt crisis began in 1970s and had three main reasons which are the oil price shocks, an increase in commodity prices and public spending by African government(2) (Ornianovic, K. et al., 2008). In a short period, the debt of African countries owed to rich countries and international financial institutions rose rapidly. For example, in 1981, the total accumulated debt was 555 billion dollars, however four years later, it doubled to 1035 billion dollars (SOURCE???). In 2010, this figure was still high with 300 billion dollars(3) (United Nations, 2010). Among many solutions proposed to deal with Africa’s debt problem such as debt rescheduling, debt capitalization and securitization, debt relief is one of the argumentative solutions. Some people believe that, canceling debt will improve living standards of African people, as well as reduce debt pressure for both creditors and debtors. Others argue that, this method does not support sustainable development because the poor countries could believe that they can ask for the further relief. From our point of view the debt relief is necessary for Africa to reduce debt burden and develop the economy. In this assignment we will analyze our position as well as opponents’ arguments for the claim that “Debt should be relieved for African countries”. Besides that, possible solutions and objections to our solutions will be given.

Our position

In this section, two reasons for advocating the claim “African debt should be relieved” to improve living standards will be given. In social aspect, this helps these countries to improve living standards. Meanwhile, in financial aspect, it encourages investments and brings benefits to both debtors and creditors. The first supportive argument states that debt cancellation would help African people to reduce their poverty and improve living standards. Poverty, inadequate water supply, illiteracy and HIV/ADIS in combination with external debt burden have been negatively affecting the lives of African people and created a big pressure on African governments. If the debt problem were not solved, along with the constraints mentioned above it would create a poverty cycle for Africa. Therefore, cancelling debt is necessary to improve inhabitants’ lives as well as rehab...

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Keywords

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