Developing countries experience crisis in numerous spheres of economic and social life, however, the world is most concerned about their debts. Since the 1970s, Western banks loaned a huge amount of money for the implementation of large-scale development projects. Perhaps, it is natural for the rich economies to provide aid to the poor, but as developing countries received these loans, they appeared unable to pay them back. A global recession and a rise in world interest rates sufficiently undermined the potential of developing economies. Due to the debt, Sub-Saharan Africa pays to the Western banks four times as much money as the region spends on healthcare and education.
Despite the attempts of developing countries to pay the debt back, the latter is continually growing due to several reasons. In the first place, third world countries experience a stable devaluation of their national currencies. It is stated that the debt shall be repaid in hard currency which usually does not change in value much. But soft currencies of the developing countries are quite unstable which drags them into further debt.
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Debts exacerbate as the export of the developing countries is quite feeble. For example, Latin America does not earn enough from its export to pay back the international debt, not even to mention providing benefits to the domestic economy. Many developing countries also borrow money to repay the earlier debts. This practice is quite common, however, completely inefficient. Paying back certain loans, governments push themselves into even harder debts.
Taking into account the increasing amount of debt, international banks try to make advances to the developing countries. Some debts are rescheduled, others are swapped through the organizations like UNICEF. Nevertheless, the growing debt of the developing countries continues to threaten the world economy.
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