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Debt Crisis
Since 1973, poor countries have received loans totalling up to US$1 billion from wealthy countries to support their domestic economies. Over the past two decades, however, many debtor countries have been unable to repay the loans on time, resulting in snowballing loans and interest. Tanzania in East Africa, among others, has accumulated external debts as high as US$56 billion, which takes one-third of its national income to repay just the interest.
To repay their debts, these countries have been forced to cut expenses on social welfare such as education, healthcare and relief, thus leaving the countries' poor people in an even worse plight. Meanwhile, in a bid to earn more foreign exchange to repay their debts, some countries have forced their farmers to shift from growing subsistence crops to cash crops, such as coffee beans, flowers and cotton, to be sold at low prices, as prices at the international market drop rapidly. As a result, the farmers are no longer self-sufficient and are vulnerable to the fluctuation of agricultural product prices on international markets.
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