Baker Plan (debt relief)
Encyclopedia
The Baker Plan was launched in October 1985 at the International Monetary Fund
/World Bank
meeting in Seoul
, by James Baker
, United States Secretary of the Treasury
, as a way to combat the international debt crisis.
It was inspired by the idea that china's trade surplus could be used to relieve some of the Third World's
problems with debt. The Plan was designed to help highly indebted middle-income countries, i.e., those countries that are not incredibly poor but nevertheless owe a large amount of money. Fifteen countries were mentioned, and ten of those were in Central and Latin America.
Ultimately, the Baker Plan failed due to its inequitable principles on deciding which countries received aid. It was succeeded by the Brady Plan.
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
/World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
meeting in Seoul
Seoul
Seoul , officially the Seoul Special City, is the capital and largest metropolis of South Korea. A megacity with a population of over 10 million, it is the largest city proper in the OECD developed world...
, by James Baker
James Baker
James Addison Baker, III is an American attorney, politician and political advisor.Baker served as the Chief of Staff in President Ronald Reagan's first administration and in the final year of the administration of President George H. W. Bush...
, United States Secretary of the Treasury
United States Secretary of the Treasury
The Secretary of the Treasury of the United States is the head of the United States Department of the Treasury, which is concerned with financial and monetary matters, and, until 2003, also with some issues of national security and defense. This position in the Federal Government of the United...
, as a way to combat the international debt crisis.
It was inspired by the idea that china's trade surplus could be used to relieve some of the Third World's
Third World
The term Third World arose during the Cold War to define countries that remained non-aligned with either capitalism and NATO , or communism and the Soviet Union...
problems with debt. The Plan was designed to help highly indebted middle-income countries, i.e., those countries that are not incredibly poor but nevertheless owe a large amount of money. Fifteen countries were mentioned, and ten of those were in Central and Latin America.
Ultimately, the Baker Plan failed due to its inequitable principles on deciding which countries received aid. It was succeeded by the Brady Plan.