Why does a country borrow money from the world bank even when they can afford it - page 6.

Wapfika

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Quote from: EluguHcman on January 31, 2024, 06:54:01 PM

Question: Why does the independent, developed and productive countries still borrows money from the World Bank even when they have enough to execute their excused reasons given why they have to borrows the money?
I am interested about this because in my country, we are independent and a productive country with revenues ought to be contented enough to execute the projects in demands of what they still borrows from the World Bank for and yet there is no economical improvements in the country instead we are running economical backwards.

Because it’s free money. World Bank can’t do anything aside from increasing the debt and interest if the country can’t pay it all on the given due date. World bank can’t size country nor its property while the country can pay only the interest while they can still borrow money.

They are just creating debt out of thin air just like fiat that doesn’t have any real value. Think about this, If someone will lend you big money without any risk of seizing your property you have a the whole time to repay it even for a lifetime do you think you will not get the offer. Besides all this debt will be useless if WW3 occur so why not borrow and invest it to your country.

Lucius

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The World Bank and the International Monetary Fund are actually tools used by those who want to control as many countries as possible in such a way that those same countries owe them money - and when someone owes you a lot of money, then you can ask him for whatever you want.

I once watched a documentary in which people who were engaged in such dirty business talked about how their countries try to exercise their influence in a country. The first phase is political influence and an attempt to appoint people who will serve their interests, and if that does not work, then the country is put in a difficult economic position, and then the saviors, the World Bank and the IMF, appear.

If politicians and the economy fail, the third option is war, which was more than obvious in the example of Iraq, Libya and Syria. We can conclude that those countries that need the help of the mentioned institutions have a huge problem, not only because of the money they borrowed and have to pay back, but also because these same institutions are starting to influence the entire monetary policy within the country. A country that does not have financial independence is no longer a sovereign country, but just another colony of the WB and IMF.

Briankimp1

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The aim of borrowing from the world bank and other countries is mostly to build or improve massive infrastructures projects of these magnitude cannot be undertaken by mostly developing nations without a significant negative effect on it’s economy so they rather borrow low interest loans from world bank and other well developed countries.
Another reason is because most borrowers like the world bank and other well developed countries will not only loan you the money but they’ll also provide technical support which is very important as you are provided with a well taught expert whose job is to provide support he/she stands in as a representative to help oversee the usage of the loans these technical supporters are funded by the lenders who inevitably get back their money when the loans are cleared.

demonica

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Quote from: EluguHcman on January 31, 2024, 06:54:01 PM

This might appear a mere or cranky question but yeee. Its been one of the interesting discussions raised by the average and vulnerable citizens in the country usually at when the masses feels the governments are playing over their intelligences and making caricature of them and yet this question keep staying questionable even after being answered.
Question: Why does the independent, developed and productive countries still borrows money from the World Bank even when they have enough to execute their excused reasons given why they have to borrows the money?
I am interested about this because in my country, we are independent and a productive country with revenues ought to be contented enough to execute the projects in demands of what they still borrows from the World Bank for and yet there is no economical improvements in the country instead we are running economical backwards.

Simply like how entrepreneur and businessman run their business. Even if they have more than enough money on a certain project they want to build, they don't just use their money on it. They borrow. Why? Because their business is still operating so they can't left it with little amount of money circulation just because they are going to use it on a project. They still need to have funds for other stuff. The government don't just focus on one project so they can't spend all of their allotted money on a single project. Also in business, it's okay to borrow money because it will eventually earn profit in the future. They are not just borrowing for expenses, it will be used to generate income. So if they don't want to overspend, they can borrow money since they also know that they can afford to pay it.

Hispo

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Well. As far as I understand. Whenever a country ask for a loan from a Inter arional organization like the world bank, it is usually to use that money to develop infraestructure which would later return the investment. For example, a country could ask for a loan to build a hydroelectical facility, we are talking about a very big loan.
When the facility is ready, then it would be matter to use the facilities to sell electricity to slowly pay back the loan. When the loan is completely paid back, whatever profit is generated by the facilities belongs to the state.
I believe one is not supposed to underestimate the amount of money needed to develop infrastructe, there are even countries which are doing relatively good and cannot afford to modernize their existing infraestructure.

Rruchi man

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Quote from: EluguHcman on January 31, 2024, 06:54:01 PM

Question: Why does the independent, developed and productive countries still borrows money from the World Bank even when they have enough to execute their excused reasons given why they have to borrows the money?

Some of the countries borrowing do not actually have the money to execute the projects they want without affecting other sectors of their economy, so there is nowhere to pull out money from, and instead of printing more money which they can, they choose to borrow instead from world bank and other countries that can lend to them to avoid having too much of their money in circulation that can lead to inflation.

Quote from: EluguHcman on January 31, 2024, 06:54:01 PM

I am interested about this because in my country, we are independent and a productive country with revenues ought to be contented enough to execute the projects in demands of what they still borrows from the World Bank for and yet there is no economical improvements in the country instead we are running economical backwards.

In your country, there are corrupt leaders borrowing for no reason and embezzling borrowed funds meant to execute projects.

bakasabo

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I think countries do it because they dont intent to return that loan in money equivalent, but rather offer some services or benefits instead in future. I will try to explain it with simple example. I have $50 and I need to spend $30 on something. I borrow $30 from world bank. Time passes and the bank asks to return loan. Instead of giving $30 back, I say that I will help him to do something for the next few weeks. And while time was passing, some other country asked me for help, and now owe me a favor. So here is what I do, that country that owe me a favor work for world bank, I got my $30 worth thing/service, and still keep $50.

pinggoki

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It probably has something to do with the budget that a government sets for their whole operation for the year and sometimes those approved budget goes overboard because some projects got unforeseen problems that lead to overspending of the budget and what happens to that project if the fund that's used for it runs out and they can't just pull out money from the annual budget that easy because that would create a cascading effect where you allow one and then you need to allow the others to do the same thing, so you go to the financial institutions that are operating on an international scale to ask for some money because you need to fund those projects so it can continue towards finishing the project, that's how I think the country borrowing money from the world bank works.

avikz

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Quote from: EluguHcman on January 31, 2024, 06:54:01 PM

This might appear a mere or cranky question but yeee. Its been one of the interesting discussions raised by the average and vulnerable citizens in the country usually at when the masses feels the governments are playing over their intelligences and making caricature of them and yet this question keep staying questionable even after being answered.
Question: Why does the independent, developed and productive countries still borrows money from the World Bank even when they have enough to execute their excused reasons given why they have to borrows the money?
I am interested about this because in my country, we are independent and a productive country with revenues ought to be contented enough to execute the projects in demands of what they still borrows from the World Bank for and yet there is no economical improvements in the country instead we are running economical backwards.

There are multiple reasons why a country would choose to borrow money even when they have the financial resource to fund it themselves. I will try to explain it.

Interest rate and repayment terms are extremely attractive when borrowing from World bank. World bank even offers grace period for long term projects similar to "EMI holiday at no penal interest" offered by some private lenders to the retail customers. Which makes the loan terms extremely favorable for the governments against borrowing money from internal lenders.

A major reason for borrowing money from World bank is the technical assistance. A lot of countries lack technical knowledge on how to execute a complex project. Very often the World Bank provides their technical assistance to complete the project within the deadline. Moreover, they fund these technical assistances by themselves and add it to the overall loan that country has taken. This is a vary important assistance, very few private lenders will extend.

Hope this helps!

pooya87

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It is hard to answer a question that is general and yet too specific at the same time. Usually when a country borrows money and increases its debt is because they are facing a budget deficit and an economic hardship which made them be in need of some extra money hence they borrow it.
For example last year, our neighbor country in the East had a couple of bad floods that did a lot of damage. They have also been facing an energy crisis with an increasing budget deficits. That is why they've been trying to get a loan.

Quote from: EluguHcman on January 31, 2024, 06:54:01 PM

I am interested about this because in my country, we are independent and a productive country with revenues ought to be contented enough to execute the projects in demands of what they still borrows from the World Bank for and yet there is no economical improvements in the country instead we are running economical backwards.

The global economy is bad and all countries are affected at different degrees. So there is a good chance that despite being "independent and production" your country is also facing the economic crisis just like everyone else and needs some extra help.

Keep in mind that it is not necessarily a bad thing as long as there is production and the debt doesn't keep growing more than the real GDP can cover.

cakravothy

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if you already have enough money for the development of a country in the current fiscal year but still borrow to the world bank. it means that the country's leaders are stupid. because borrowing at the world bank there are conditions that must be fulfilled which are detrimental to a small country and very beneficial to a large country. besides that it also has high interest in its payments.

Darker45

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For one, there's always a room for improvement. A rich and beautiful country can still improve in many ways. In this sense, sky is the limit in terms of improvement, so in a way there's always not enough. Needs and wants are always ahead of the available resources. But there may be certain territories, small ones in particular, that don't have debts in the World Bank or other countries. Liechtenstein, I believe, is an example.

The reality with most countries, however, is that they're poorly run, and not with brilliant leaders but dumb yet popular ones. And since the leaders will come and go and the government isn't their personal business, they don't care about it. What's important is that they've accumulated so much wealth while they're in power.

oktana

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Borrowing money from world bank is averagely done when the country wants to maybe take on a large project which requires more money than they have. Imagine you have $50 but you want to do something and need extra $50, then you have to borrow the money from your friend. People who doesn’t know much about you and your friend’s agreement would think that you borrow $50 which they know you can afford, whereas you added it to what you have so you can solve your problem. It can also be because the country doesn’t want to run into financial issues so they would rather use borrowed money than the one they have.

serveria.com

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I am not sure about countries but I know that many persons and businesses prefer to use borrowed money because loans are cheap and many prefer loans to spending/investing their own money. I believe it's the same with countries. Instead of raising taxes, raising retirement age and other unpopular measures, why not just borrow some money if it's easily available?

Churchillvv

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If I'm to answer this question it will be biased and an aggressive answer that might sound like agitation in the wrong place and time.

BTW, I don't really know why they choose to borrow for some useless reason of development projects but I will say that the disadvantage of borrowing is far higher than the advantage so what's the purpose of borrowing if not and alliance with foreign countries in order to suppress the debtors mean while the national leader who takes this actions has a selfish interests for such action.

Infact there is a shadow party in borrowing from world bank that makes developing countries like mine to run debts.

EluguHcman

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This might appear a mere or cranky question but yeee. Its been one of the interesting discussions raised by the average and vulnerable citizens in the country usually at when the masses feels the governments are playing over their intelligences and making caricature of them and yet this question keep staying questionable even after being answered.
Question: Why does the independent, developed and productive countries still borrows money from the World Bank even when they have enough to execute their excused reasons given why they have to borrows the money?
I am interested about this because in my country, we are independent and a productive country with revenues ought to be contented enough to execute the projects in demands of what they still borrows from the World Bank for and yet there is no economical improvements in the country instead we are running economical backwards.

Topic: Why does a country borrow money from the world bank even when they can afford it - page 6. (Read 1118 times)