Saturday, April 01, 2006

Debt Relief for Latin America

Evo Morales, the socialist President of Bolivia, is asking the international community to forgive $3.5 billion in foreign debts. Luiz Alberto Arce will present a proposal to the annual IDB meeting also asking for for debt reliefs to Honduras, Nicaragua, and Bolivia, and Haiti.

Massive national debts have prevented many third world countries from realizing their true potential. Most of these smaller governments don't have the tax base to pay off the full debts, and instead can barely afford to pay the interest on the debt. As a result, these nations are forced to continue racking up higher debts and also lack funding for social programs needed to bring their nations the developed world. High debts also reinforce the already rampant inflation in these nations, causing double digit inflation in much of Latin America.