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Debt of developing countries
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==Debt abolition== There is much debate about whether the richer countries should be asked for money which has to be repaid. The [[Jubilee Debt Campaign]] gives six reasons why the third world debts should be [[Debt cancellation|cancelled]]. Firstly, several governments want to spend more money on poverty reduction but they lose that money in paying off their debts. Economist [[Jeff Rubin]] agrees with this stance on the basis that the money could have been used for basic human needs and says it is [[odious debt]].<ref>{{Cite web |url=http://probeinternational.org/library/wp-content/uploads/2011/02/RUBIN.pdf |title=Challenging apartheid's foreign debt |date=April 1997 |access-date=18 January 2017 |last=Rubin |first=Jeff |archive-date=16 May 2017 |archive-url=https://web.archive.org/web/20170516125652/http://probeinternational.org/library/wp-content/uploads/2011/02/RUBIN.pdf |url-status=dead }}</ref> Secondly, the lenders knew that they gave to dictators or oppressive regimes and thus, they are responsible for their actions, not the people living in the countries of those regimes. For example, South Africa has been paying off $22 billion which was lent to stimulate the [[apartheid]] regime. They have yet to recover from this, their external debt has increased to $136.6 billion while the number of people in the housing backlog has increased to 2.1 million from 1994's 1.5 million.<ref>{{Cite web|url = https://www.bloomberg.com/news/articles/2013-08-01/south-africa-s-post-apartheid-failure-in-shantytowns|title = South Africa's Post-Apartheid Failure in Shantytowns|last1 = Brand|first1 = Robert|first2 = Mike|last2 = Cohen| website=[[Bloomberg News]] }}</ref><ref>{{Cite web|title = A Guide To South Africa's Economic Bubble And Coming Crisis| website=[[Forbes]] |url = https://www.forbes.com/sites/jessecolombo/2014/03/19/a-guide-to-south-africas-economic-bubble-and-coming-crisis/|access-date = 2015-04-07}}</ref> Also, many lenders knew that a great proportion of the money would sometime be stolen through corruption. Next, the developing projects that some loans would support were often unwisely led and failed because of the lender's incompetence. Also, many of the debts were signed with unfair terms, several of the loan takers have to pay the debts in foreign currency such as dollars, which make them vulnerable to world market changes. The unfair terms can make a loan extremely expensive, many of the loan takers have already paid the sum they loaned several times, but the debt grows faster than they can repay it. Finally, many of the loans were contracted illegally, not following proper processes.<ref>{{cite web |url=http://www.jubileedebtcampaign.org.uk/1%20Why%20should%20we%20drop%20the%20debt%3F+2675.twl |title=Jubilee Campaign |publisher=jubileedebtcampaign.org.uk |url-status=dead |archive-url=https://web.archive.org/web/20100428021810/http://www.jubileedebtcampaign.org.uk/1%20Why%20should%20we%20drop%20the%20debt%3F+2675.twl |archive-date=28 April 2010 }}</ref> A seventh reason for canceling out some debts is that the money loaned by banks is generally created out of thin air, sometimes subject to a small capital adequacy requirement imposed by such institutions as the Bank of International Settlements. [[Maurice Félix Charles Allais]], 1988 winner of the Nobel Memorial Prize in Economics, commented on this by stating: "The 'miracles' performed by credit are fundamentally comparable to the 'miracles' an association of counterfeiters could perform for its benefit by lending its forged banknotes in return for interest. In both cases, the stimulus to the economy would be the same, and the only difference is who benefits."<ref>The Chicago plan & New Deal banking reform By Ronnie J. Phillips, 1995, M.E. Sharpe Inc.</ref> ===Consequences of debt abolition=== Some people argue against forgiving debt on the basis that it would motivate countries to default on their debts, or to deliberately borrow more than they can afford, and that it would not prevent a recurrence of the problem. Economists refer to this as a [[moral hazard]]. It would also be difficult to determine which debt is odious. Moreover, investors could stop lending to developing countries entirely.
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