DEVELOPMENT

International Aid and Debt Repayment

International Aid and Debt Repayment

Learn about managing debt repayments and the different types of aid.

In recent years there has also been an increased awareness of the impact of debt repayments. Poorer countries have had to borrow huge amounts from richer ones, and many of them are unable even to repay the interest on these loans; campaigners want the richer countries to erase the debts.

One idea that is now becoming popular is that of conservation swaps, or debt-for-nature swaps, in which some of the developing nation’s debt is cancelled in return for investing in conservation measures to improve the lives of local people. Often this means NGSs purchasing debt titles on behalf of the country involved and the country then agreeing to enact conservation policies.

There are many ways in which richer nations can help poorer ones, and each has its advantages and disadvantages. When large amount of aid are given to the government of the developing country, this can be used to buy food and provide better services, but if the government is corrupt or inefficient very little reaches the people.

Bottom-up aid is when charities work with the poorest people in the country directly without any interference from government. However this can also be inefficient as some projects are too large.

Conditional aid is when a rich country offers to help a poor country by giving financial aid but in return the poorer country must give them something in return, such as access to their airspace.

Aid

An international aid donor is usually a government or NGO, which provides long-term aid to a developing country. The focus for aid is changing. In the past, for instance, when many people were hungry, aid donors would supply food. Now this is seen as a short-term approach and instead there is greater emphasis on giving people the means to grow food themselves.