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Letter: Bad debts

Bad debts

Sir: It is not Diane Coyle who has forgotten that, during the Eighties, more than a half of the Third World's debts owed to the commercial banks were written off as losses; it is Nigel Wilkins (letter, 2 January) who has forgotten that these write-offs were purely in the banks' books, in recognition of the fact that they probably were not going to get the money back; they did not presage any diminution of the vigour with which debtor countries would be pursued for repayment. In any case, the most highly indebted countries (in terms of debt as a percentage of GDP) - the ones in sub-Saharan Africa - owed other governments and the international financial institutions (such as the IMF), not the commercial banks. They still do.

As soon as the world banking system was safe, the IMF lost interest in the debt crisis.


London N13