Energizing Third World Economies: The Role of Debt-Equity Swaps

Publication Date: November 1989

Publisher: Heritage Foundation (Washington, D.C.)

Author(s): Melanie S. Tammen

Research Area: Banking and finance

Keywords: Trade and foreign aid

Type: Report

Abstract:

The Bush Administration, international lending agencies, private banks, and governments of developing countries continue to seek ways to manage the Third World debt problem. To manage the debt and promote economic growth, new capital investments in developing countries are imperative. Citizens of debtor countries have hundreds of billions of dollars deposited in foreign banks because they lack confidence in their own governments or economies. Debt-equity swaps, combined with privatization and economic reform, can attract this flight capital back home, and along with investments from foreign citizens, bring new economic opportunities and debt relief to the Third World.