Alleviating the LDC Transfer Burden: the Role of Debt Reduction

  • Nick Snowden
Part of the International Economics Study Group book series (IESG)


A central consequence of the international debt crisis of the early 1980s has been the continuing lack of access to voluntary capital market financing for most of the nations initially involved. These countries face an acute external constraint with non-interest current account surpluses required to finance net transfers to external creditors. While cutting this burden in the short term, debt reduction is also intended to encourage a revival of investment inflows to countries where relative capital scarcity suggests potential for high returns. Viewed in this context recent experience has been perverse and debt reduction represents an attempt to remedy the consequences of severe market failure.


Cash Flow Debt Relief Country Debt Outstanding Debt Loan Loss Provision 
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© The International Economics Study Group 1992

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  • Nick Snowden

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