To carry out their mandates and meet their obligations, governments need streams of revenue as a means to raise funds for these costs and those of various other public projects. Some of the ways a government can raise money for its projects include tariffs, taxes, sales of government bonds, and internal and external borrowing. The total outstanding government borrowing comprising of borrowing from internal creditors and foreign creditors to finance government operations is referred to as the national debt or government debt. Government borrowing comprises of issuing of bonds, securities, and bills. Government debt is also an indirect debt to the taxpayers. National borrowings have a timeline within which they need to be repaid. However, some countries might not be in a position to raise enough money to settle the debt. These countries have the option to restructure the terms of repayment to extend the repayment period. The restructuring of the loan term also referred as national debt rescheduling. Several nations have had millions of millions of dollars of principal on loan rescheduled. Some of these nations are looked at below.
In 2014, the government of the Islamic Republic of Afghanistan managed to reschedule a total of $41,863,000 borrowed from the "Paris Club" of 19 creditors from leading developed economies. The Afghanistan government was not in a position to pay back the amount owed because they needed more financing of their project. The debts were rescheduled through International Monetary Fund, World Bank, and creditor nations. After facing years of conflicts, war, and economic instability, the government had borrowed funds to facilitate rebuilding process, reform programs, finance the military government activities and to meet the food deficit in the country. Even with the rescheduling of debts, the country still faces a debt crisis.
The Government of the Republic of Haiti and the Paris Group of Creditors had to restructure most of the country’s debt in 2014 due to the country’s poor track record on reforms and high external debt conditions. A total of $4,253,000 was rescheduled and reached under the Heavily Indebted Poor Countries (HIPC) initiative to enable the country to achieve the objective of the debt sustainability. The government borrowed the amount to help in the recovery of the economy after the earthquake that inflicted the country with a $7.8 million damages. However, during the recovery, the country was further hit by two hurricanes adversely affecting the agricultural output. The country could not repay the loans as per the agreement.
Bolivia rescheduled nine principal loans in 2014 to try to solve its debt crisis. Bolivia’s debt rescheduling was a direct intervention by the United States. A total of $4,420,000 was rescheduled in 2014 through the United Nations Assembly. The amount was initially meant to finance development projects in the humanitarian sector.
Inability to Pay Amidst Debt Crises
Other countries that had millions of dollars of their principal amounts of debt rescheduled or restructured in recent years have included Ivory Coast, Gabon, Georgia, Comoros, and Mozambique. Most of these loans rescheduled were mostly borrowed from external sources and the rescheduling was facilitated mainly by International Monetary Fund and the World Bank. Most of these countries needed an extended period for the funds borrowed to meet the resource objectives while other countries had debt crisis thus could not raise the principal amount on time to pay off the debt.