debt relief

• Debt relief is when debts are either reorganised to make them more managable, or reduced. Many LICs owe money to other countries. Often the repayments and interest are so expensive that countries in debt have no money left to spend on development projects.
•  The money that is saved in debt can then be used for development projects such as industry, resources and infrastructure. Debt relief can help a country out of financial struggles and to better their country socially, environmentally and economically long term.​
• advantages

  With reduced debt payments, governments can allocate more resources to essential sectors like healthcare and education
• advantages

  If a country invests more money into productive sectors it could lead to economic growth and job creation
• advantages

  Improves access to basic needs like food and water, reducing poverty
• advantages

  Debt relief can create a sense of optimism in the market signalling the country is capable of managing its finances and improving its economic outlook
• advantages

  Improved relations with international finance institutions
• advantages

  A more sustainable level of debt means reduced risk of future crises​
• disadvantages

  Encourages irresponsible borrowing, could become a habit
• disadvantages

  Countries may become reliant on periodic debt relief without taking sufficient steps to help their countries long-term
• disadvantages

  There is potential for debt accumulation in the future if a country doesn’t address the structural issues that led to high debt in the first place​
• disadvantages

  Debt relief can result in losses for creditors, particularly institutions or other countries that are owed money​
• disadvantages

  Countries receiving debt relief may face external pressure to accept terms that benefit the creditors rather than the country itself​