What policies can less developed countries follow to resolve their debt problem?
Highly indebted countries can resolve by less developed countries:
- Seek help by international agencies for example International Monetary Fund /World Bank Highly Indebted Poor Countries initiative. Less developed countries are needed to show good governance, implement economic reforms, include civil society and meet targets conditionality
- Effort macroeconomic stability from balancing government budgets and tight monetary policy. The resultant decrease in inflation enhances competitiveness, reduces present account deficits and assists earn foreign currency for interest payments
- Reschedule debt repayments for example temporary suspension or longer era of repayment
- Default that is declined to carry on paying debt.