Word: debtors
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This commitment could include, on the part of the United States, a withdrawal of all aid, "humanitarian" or not, to the Contras in Nicaragua. It could include, on the part of the Soviet Union, an already likely debt-forgiveness program for Cuba and other poor debtor nations...
...adhere to the debt policy held by both the United States and the Western commercial banks, such as Citibank, debtor nations had to impose harsh austerity measures to garner capital. Austerity measures entail raising taxes and reducing expenditures, very often by slashing the budgets of state-owned industries, lowering the subsidies of government provided products and raising the prices of bus fares and other state-run services...
...accept a reduction in the debt owed them by the countries, allowing institutions such as the International Monetary Fund (IMF) and World Bank to loan money to the countries. Until now, creditors have been unwilling to loan money to countries that have deficits. The influx of money that the debtor-nations will receive, increased by the reduction of debt and the IMF money, will help their economies grow, experts...
...Brady Proposal comes in the wake of almost 10 years of a staunch U.S. policy towards debtor nations: that is, that all the money loaned must be paid back in full eventually. This was one of the parts of Secretary of State James A. Baker III's debt plan...
...however, was calling for a revival of the Baker plan. Baker hoped to spark economic expansion and allow debtors to grow their way out of their problems. What happened was just the opposite. Most banks simply refused to issue new loans, fearing they would be throwing good money after bad. As a result, debtor countries found themselves using more and more of their scarce currency reserves to pay their debts. Last year Latin American nations paid $26 billion in interest to their creditors but received only $6 billion worth of new bank loans. The results were stagnant growth...