ABSTRACT
This chapter addresses through incremental financial measures which have done little to diminish the impact and may have exacerbated the crisis in some instances. The cost of the external debt is a critical component of the wider debate on aid, because it represents a huge financial imposition, translating into real deprivation for many of the world’s poorest people. The debt negotiations conducted in the boardrooms of creditor banks examine rows of numbers in abstraction from their real meaning in terms of sustaining livelihoods in the borrowing countries. The fundamental weakness of the initiative is that - like most debt reduction schemes that have preceded it - it appears to treat the problem as one of liquidity, rather than one of basic solvency. Debt forgiveness needs to be undertaken with minimal additional conditionally, while the process should provide certain assurances to the creditor countries that a clean break can be made with chronic indebtedness.
