Debt is an efficient tool. It ensures access to other peoples’ raw materials and infrastructure on the cheapest possible terms

Many developing nations are in debt and poverty partly due to the policies of international institutions such as the International Monetary Fund (IMF) and the World Bank.

Their programs have been heavily criticized for many years for resulting in poverty. In addition, for developing or third world countries, there has been an increased dependency on the richer nations. This is despite the IMF and World Bank’s claim that they will reduce poverty

the IMF and World Bank provide financial assistance to countries seeking it, but apply a neoliberal economic ideology or agenda as a precondition to receiving the money. For example:

    * They prescribe cutbacks, “liberalization” of the economy and resource extraction/export-oriented open markets as part of their structural adjustment.
    * The role of the state is minimized.
    * Privatization is encouraged as well as reduced protection of domestic industries.
    * Other adjustment policies also include currency devaluation, increased interest rates, “flexibility” of the labor market, and the elimination of subsidies such as food subsidies.
    * To be attractive to foreign investors various regulations and standards are reduced or removed.

Poor countries must export more in order to raise enough money to pay off their debts in a timely manner.

Maintaining Dependency and Poverty

One of the many things that the powerful nations (through the IMF, World Bank, etc.) prescribe is that the developing nation should open up to allow more imports in and export more of their commodities. However, this is precisely what contributes to poverty and dependency.

Developed countries grow rich by selling capital-intensive (thus cheap) products for a high price and buying labor-intensive (thus expensive) products for a low price. This imbalance of trade expands the gap between rich and poor.

In some countries, more is spent on debt servicing than education

This inevitably means that the poor suffer, while the rich get richer.

http://www.globalissues.org/TradeRelated/SAP.asp