Third world staggers under debt crisis

(The Workers' Advocate, January 1, 1990, p. 4)

. The Third World debt crisis emerged in the 1980's, as the menace of defaults on loans threatened to bring a collapse in the banking system. Although various deals were cooked up to temporarily avert the collapse, debts continue to pile up, more and more go unpaid, and the crisis simmers.

. In December, the World Bank reported total developing country debt at $1.165 trillion in 1989, $9 billion above the 1988 level. If we exclude the production from the U.S., Russia and Western Europe, this debt amounts to over 26% of the Gross National Product for all the remaining countries in the world.

. The World Bank also reports a 25% increase in total outstanding arrears. that is in unpaid, overdue debt. It has risen from $41 billion at the end of 1987 to $52 billion at the end of 1988.

. Why these countries took these loans, and what they got for the money, is another scandal. One that can't be dealt with here. But they are being squeezed dry to pay off even the interest on these loans. And not only are they driving down the already desperate living conditions of the working masses in these countries, but the local economies are being destroyed. Meanwhile, the threat of major defaults on the loans grows and this endangers the stability of the banks of the imperialist countries.

. Recently, the capitalists have been raising hopes that the opening of Eastern Europe will provide an expanded market for investment by Western capitalism. But a number of these countries are themselves in a shambles tied to large foreign loans. Poland's difficulty paying off a $40 billion debt and Hungary's similar problem with a $20 billion debt have already contributed to the world debt crisis.

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