The story is old making appearance after the global meltdown. It says about a small village in the French Riviera, dependant on tourism and business has been very bad because of monsoon and everyone was in debt. In walks a wealthy tourist and enquires about the room tariff, preferring a room with best view. The hotel owner quotes €100 and offers the best room on the third floor, with additional terrace space. The tourist places a €100 note and climbs up the stairs.
A supplier of groceries and meat is at the counter, as the owner thrusts the €100 bill and says our debts are now cleared. The supplier hurries out with his umbrella and goes to the butcher to whom he owes €100. The butcher calls the farmer, who supplies livestock and settles his pending bill of €100. The farmer runs to his mistress and pays her the money for services earlier rendered. The lady walks in to the hotel and pays the owner the money she owed for letting out the rooms. The €100 bill returns to the counter as the tourist walks down, stating that he doesn’t like the room and pockets his money and walks out.
The change that had come about was, now the village had become debt free just by the mere circulation of the currency from one hand to another.
Exploitation of resources, human and material, over the centuries have led countries into a perennial debt-trap, no different than nation’s bonded economic slavery. No development will ever reach the poor masses unless funds are diverted to their betterment. Many countries, particularly in Africa, Latin America and Asia are struggling to meet their debt obligations to rich countries, which immensely benefited from the colonisation. Failure from timely servicing of loans and interest leads to credit down grades and higher interest rates, which further sink the poor countries.
Leaders from the rich countries, with trillions in reserves, could take a bold step in writing off the debts of poor countries, one as an atonement for the centuries of unfair treatment and second, as a chance of offer of hope and opportunities to the humanity. Corrupt and despot regimes will indeed pose a challenge and a post loan waiver could be subject to monitoring and mentoring.
Back home, West Bengal and a few other states suffer from central loans and interest servicing affects development works. Though sovereign liabilities as per present laws cannot be waived off, it is time such law is relooked for the sake of future and growth, subject to strict bar on future fiscal deficits and loans, save in a case of natural calamity or ‘Force Majeure.’ This will lead to good governance as well!
I am happy that Bill and Melinda Gates Foundation has come forward to help Nigeria pay off the $76 million Polio debt. A small step for gates, a giant leap for Nigeria! The world needs more leaders of nations and super rich individuals to come forward and play a levelling role.