Over the past 30 years, many countries have spent most of their income repaying the interest on foreign debts. Many people consider the initial loans responsible for these debts to be more beneficial to the lender than to the borrower.
In the past, most developing countries were short of ready funds to build the infrastructure necessary for development. Therefore, foreign countries were asked to provide loans for projects to help the countries become self-reliant. However, this money was often used to make quick profits for developers or to line the pockets of corrupt officials. Once the money is used, the problem of repayment begins.
Since the 1970s many developing countries have found that they cannot pay back the loans or even the interest accumulated on the loans. Consequently, the countries have borrowed more money to pay back the interest. This gave western countries the power to dictate government policy through the World Bank and the International Monetary Fund. These financial institutions are only interested in balance sheets. Therefore, nations have been forced to adopt policies which do nothing to develop their resources or improve the lives of the local people.
Countries that get caught in this debt spiral have no chance of paying back the initial money borrowed, while the banks making the loans make two or three times the money lent after the interest payments are taken into account. As most donor countries have already been repaid, both in terms of money and in terms of economic interest, it is morally right for developing countries to refuse to pay back foreign loans.