103.: The “odious” route to a sovereign debt crisis in the Democratic Republic of Congo
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A major discussion in the context of sovereign debt crisis has been about how to solve the debt overhang problem that impoverishes poor countries. The solution to the debt overhang problem is motivated by the logic that debt relief may enhance efficiency if a country's debt is large relative to its income. The problem becomes more acute when the loans were advanced to a regime that would siphon off the funds rather than using them for the betterment of its population. This is the case of “odious” debt. The entry discusses the legal origins of the odious debt doctrine and uses the case of Democratic Republic of Congo to discuss how odious regimes have worked in the real world to accumulate debt whose burden had to be borne by the working population of the country and which brought the country towards a financial crisis.

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