Many parts of the developing world, particularly Africa, Latin America and parts of Asia soon followed. This was met by debt refinancing in return for strict structural adjustment programs implemented by the IMF and World Bank. Western economists insist that structural adjustment programs will not only ensure that poor countries continue to make timely payments on their debts, but that they will eventually foster development and economic growth. Many highly indebted countries spend more of their national incomes on interest payments than for health and education combined. In addition, countries desperate to pay off their debts are forced to pillage their natural resources to gain new income, contributing to global warming, water pollution and soil erosion.
Debt creates social unrest and war and also contributes to immigration.
Ordinary people are paying with their lives to pay back loans which they never asked for and from which they derive no gain. Debt crisis has given creditor nations the chance to intervene in the management of the debtors' economies through the policies of the IMF and World Bank. The structural adjustment policies have laid the groundwork for the institutionalization of neo-liberal economic policies and the expansion of free trade. For multinational corporations in debtor countries, structural adjustment has enhanced profitability by gaining access to cheap raw materials, reducing wages and the power of unions. Definitive cancellation of the debt in situations where countries burdened with high levels of human need and environmental distress are unable to meet the basic needs of their people or achieve a level of sustainable development that ensures a decent quality of life.