While in the long run they may help a country become more competitive in the global market, in the short run they can lead to local business failures in the face of global competition, massive lay-offs, lower wages, and even less investment by government in education, health, and other social programs. The debt crisis can also affect the environment. This may have exacerbated the harmful environmental practices that prevail in many countries, as governments and entrepreneurs mine their natural resources in order to generate hard cash. The debt burden carried by impoverished countries affects citizens in the rich countries as well. Environmental damage has global repercussions.
Widespread poverty means that people have less money to buy goods and services from other countries.
Debt reduction for the poorest countries would not represent a new or unique policy for the United States. Over the years, we have substantially reduced debts owed by Poland, Jordan, and Egypt. After Word War II, Germany's debt was substantially reduced in order to allow it to rebuild. We have also on occasion reduced debts owed by African countries. In these cases, the U.S. has recognized that debt reduction can be sound foreign policy.