Currently, there exist diverse economic disparities between developed and developing countries. The rich countries are the industrialized and economically stable countries while the poor countries are still industrializing and developing. The developing countries in their pursuit of economic development they have accrued debts that are derailing their economic development. It is desirable that rich countries should write off the debts to aid sustainable development of the developing countries.
Developing nations borrow money to invest in development projects in infrastructure, education, trade, and health. These projects target at improving the lives of the people and the economies of the countries. The high demand for finances for the projects have left most poor countries buried in debts from excessive external borrowing (Jayendu & Yan, 2013). The size of the debts accrued by the developing countries is recognizable and the impact on the countries’ economies evident.
As noted by the World Bank report the average per capita income of most developing countries repaying accrued debts is below a dollar a day (World Bank, 2015). Further, the report indicates that paying the accrued interest on the external debts costs the developing countries more than 5 percent of their annual revenues (Yagoub, 2015). The trend means that unless waived the debts will continuously inflate the economies of the poor states.
In conclusion, the adverse effects of external debts on developing countries influence negatively on the investment and growth of these countries. The accrued debts deter the development of the countries as they struggle to service the debts. The initiative of debt reduction has proofed inadequate and rich countries need to consider writing off the debts owed by the poor countries.