what are the implications of foreign debts to the sovereignty and economy of third world countries?

Answer 1

With all debt comes a set of "covenants". Private companies know this, since indebting themselves often means certain balance sheet, statement of operations or cash flow ceilings. It could even take the form of equity restrictions; these covenants are normally straightjackets that inhibit a company's day-to-day operation.

Likewise, third world countries adhere to a set of covenants in the form of government deficit ceilings, government spending restrictions, foreign exchange and / or interest rates controls maybe, and in general a very strict oversight of how money is spent by the public administration. On the other hand, the "servicing" of a debt (in the form of periodic interests that must be honored at a certain date(s) constitutes a drain of resources that otherwise could have been funneled to poverty reduction or the fight against AIDS.

Foreign debts have huge implications for the sovereignity and economy of underdeveloped nations.

Answer 2

The sovereignty and economy of third world countries is that they are mainly run by authoritarians who control the poor and feed the rich. Often rulers of the poor country takes bribes from large international corporations. The large businesses can then write a contract that gives the Cooperation huge profits and enriches the wealthy in the poor Country and maintains the poverty in the poorest of the third World Countries.
It is a sad affair and a corruption of the values of the United States towards other people and towards true Democracy.
The game is fixed.
The United States and other rich Countries turn their backs on this conduct and allow the thievery to go on in the name of higher profits and better economies at home because of the flow of profits into the business sector.
The situation shows the real lack of concern for other people in the world by the rich and powerful Nations including the United States.
Just take a step back and check it out. The immigration, so called, problem is a perfect window into the exploitation and uncaring by the American Government and the people who elect this leaders.
Ignorance is the only excuse for this behavior.
These foreign Countries then borrow money to operate there Government and accumulate debt at the expense of the people of that Country. But, there is plenty of heartlessness to go around on both sides of these fixed economic contracts where the wealthy get the money and maintain the disparity of income in their own Country.

Answer 3

Under the condition of foreign debt the economic policies and decisions can not remain independent of interference either by the foreign country or international agencies like the World Bank or IMF etc. Each and every policy decision to uplift the national economy may be objected or delayed or halted. This may lead to internal emergency sort of situation resulting in anarchy. The domestic industries, banks and other corporates may also get affected in their decision making. The inflation rate and prices of commodities may rise un-hindered due to such interference.

Answer 4

Multinational capitalist concerns will buy the country. If the country is worth raping rather than keeping then, they will reinstitute slavery under the guise of the need for 'workers' employed within mining or oil exploration.

One could argue that there are NO third-world sovereignties with a usable economy. If the 'sov' exists, the notion of a 'treasure' is soon to follow. And, of course, so is the notion of Swiss bank accounts.

Most countries which rely on 'overseas aid' never get it. Or, if they do, its delivery is sporadic. Airdrops from C130s are viewed with suspicion. After the 'food' drop, is the C130 going to come back and reveal itself as a gunship?

Regardless of the attempted delivery of 'aid', most of it is dumped into the arms of the guerrilla forces who (apparently) refuse it.

But who is the aid meant for?

Refer back to my opening paragraph... it's frightening, ain't it?

Paul

Answer 5

They will never pay back the debts, many third world countries have made nuclear bombs of whatever money they have borrowed