Is Debt Relief Possible to Poor Countries Article

Is Debt Relief Possible to Poor Countries - Article Example I will present the article from Stanford University done by Marguerite Religioso that goes to prove in her article†¦ that debt relief is possible only for some poor nations. She cited that the International Monetary fund has been continuing its efforts to come up with an instrument that would help the poor countries who are heavily indebted. Her theory of â€Å"Is debt relief a viable solution to worldwide poverty or a waste of time and money† has pros and cons which she cited in the article. To evaluate the rationality of arguments, the author cited the study done by Stanford graduate students Henry and Arslanalp who used the stock market as a reliable source of the economic indicator. The significant result of the study proved that the stock market of the countries that obtained debt relief from the Brady plan (named after the U. S. Government Treasurer) showed 60% appreciation in 1989 to 1995 in real dollar terms even before debt relief was formally accepted. This is t he period that debt relief is being studied for implementation in sixteen countries identified in Brady Plan. The study confirmed Henry’s theory that the behavior of the stock market is an accurate predictor of economic movement/ Henry says, â€Å"within a year of each country’s Brady agreement, foreign capital began flowing back in, and robust economic growth resumed† that only goes to show debt relief is beneficial. Religiose referred to the study of Henry that explains a debt relief situation that is usually happening when a country suffers temporary difficulty of debt servicing. Its creditors get to be apprehensive and quickly collect their loans all at once. Since no one could be paid at all, a complete economic standstill occurs. When some of the debts are relieved, new funds will come to stimulate growth and investment. While the basic objective of debt relief is supposed to be applied to all poor countries, Regiglioso reported that debt relief doesn†™t work for the poorest of the poor.