How Should International Debt be Rectified in Ghana?
International debt is a modern geographical issue which has sparked
much controversy in the past and continues to affect our global
community to this day. Through this essay I aim to analyse contrasting
viewpoints and conclude with my own perspective of the current
situation, having digested the main arguments.
The debt crisis originated in the 1970s due to considerable increases
in oil prices. Developing countries were forced to borrow extortionate
sums of money from the developed worlds financial institutions, who
were keen to take advantage of such countries vulnerability. The
lending continued as Third World countries were forced to borrow more
to pay back outstanding debt repayments and a further increase in oil
prices in the early nineties saw many countries fall into
irreconcilable amounts of debt.
Figure 1: Map of Ghana's location
(adapted from The Africa Debt Report, Page 21)
Ghana is a small country in the continent of Africa (see Figure 1)
which has had to cope under the tight restrictions of international
debt. Even in recent years Ghana has been forced to borrow large sums
of money due to fluctuating prices in the global market. In the year
2000 the price of Ghana's main export commodities, cocoa and gold,
depleted and the price of its largest import, petroleum, increased.
The inevitability was a higher inflation and a huge increase in
Ghana's trade expense which served to reduce residual profits and
exacerbate the countries existing debt problems.
The problem however, has not gone unnoticed and various organisations
within the developed world have differing views on how it should be
Despite it's roll as a business, the World Bank appreciates that
Ghana's debt is an issue which must be addressed. In an attempt to
support Ghana and various other indebted countries, the bank worked in
conjunction with the International Monetary Fund (IMF) to produce the
Heavily Indebted Poor Countries (HIPC) initiative. The initiative is a
unique approach to tackling international debt, targeting Third World
countries with the lowest debt sustainability (repayment
capabilities). The aim is to ensure that Third World nations are not
faced with debt which they can't afford to pay and that the funds
released through the initiative are channelled into vital sectors such
as education and health care. Bilateral creditors and multilateral
lenders cover the expense incurred from the scheme.
However, such an attempt at debt relief has been scrutinised by
various charity organisations such as Christian Aid. They believe that
although the HIPC initiative is good in principle, the World Bank
could be doing more in the way of international debt relief. Another
criticism Christian Aid has of the HIPC...