For decades now, the International Monetary Fund (IMF) and the World Bank have required borrowing countries to adopt an “export more, spend less” model of development. And the countries that have gone furthest to shift to export-oriented production and lift restrictions on investment are now the most vulnerable.

IMF acts as an international organization that oversees the global financial system by following the macroeconomic policies of its member countries, in particular those with an impact on exchange rates and the balance of payments. It is an organization formed to stabilize international exchange rates and facilitate development.

“Debt relief is a proven, effective, and fast way to reduce poverty”. And if the IMF used its existing resources to pay for it, this approach would put a minimal burden on U.S. taxpayers. Unfortunately, however, debt cancellation is not even mentioned in the draft official communiqué that has been prepared for the G20 leaders.

In hard times like these, it’s understandable to want to focus on problems in your own backyard. But ignoring the problems of the poorest countries will come back to haunt the United States and other richer nations in the long run.

How did developing countries get sucked into this valley of debt in the first place? They didn’t have a subprime mortgage problem. Maybe their financial firms weren’t key players in the high-risk derivatives markets? Or they got sucked in because the globalization policies that have been imposed on them made them extremely vulnerable to volatility in global markets? It happens that:

Debt is somewhat a “habit”, a “cycle” which lenders are “pushing” loans on borrowers and turning a blind eye to their misuse, and in response to criticism for their behavior, adding more conditions to new lending. These conditions sometimes seem (mostly are) sensible, but all too often they only serve the interests of the lenders rather than the borrowers. Part of the cycle is that as countries get deeper in debt and grow more impoverished as they try to repay, the lenders impose a whole new range of what they say are anti-poverty and anti-corruption conditions, but which most often have other agendas, such as opening up poor countries to multi-national companies. Even when the conditions are sensible, example is like the health warnings found on cigarette packets — they are there to satisfy the critics, but the cigarette makers hope to counteract them through ever more aggressive advertising.