ABSTRACT
The IMF meetings in Berlin marked the sixth anniversary of the debt crisis and the third anniversary of the Baker Plan for dealing with that crisis. Solutions would be negotiated between debtors and creditors, both public and private; but solutions would not be mandated by creditor country governments. Thus, if comprehensive, compulsory debt forgiveness were adopted, in all likelihood it would push the troubled debtor countries into permanent dependence on aid from industrial country governments. The economic burden posed by external debt service is said to be hindering the development of democracy in the troubled, developing countries. Under the global solution, private commercial banks would be “encouraged” to sell to an international institution their existing loans to troubled debtor countries at a discount from par. The bank extends credit to the borrower in return for the borrower’s promise to pay interest and principal in the future.
