ISSUES OF THE INTERNATIONAL DEBT CRISIS: A STUDY IN DEBT DIPLOMACY, 1980 – 1990

Abstract

This paper is a critical examination of some economic and ethical issues of International debt crisis. Mexico's default of interest payment on foreign debts in August 1982 marked a turning point in the history of international debt diplomacy, a development that initiated a discourse on International debt crisis. Since then, many states especially in the Global South began to have difculties in the servicing and payment of foreign debt. Also, Western nancial institutions faced serious problems which some people feared disintegration of the system in the 1980s. However, these institutions survived the crisis by introducing some innovations into the system. These innovations included debt rescheduling, reduction of interest rate, extension of repayment period and injection of fresh capital into the system. This paper examines some economic and ethical issues of international debt in the ongoing debt crisis facing most states in the Global South and suggests a way forward for the creditor and debtor states who are major actors in the International debt diplomacy.