Developing countries’ debt is external debt incurred by the governments of Third World countries generally in quantities beyond the political ability to repay. When the interest on the debt exceeds what the country’s politicians think they can collect from taxpayers it becomes “unpayable debt” so the debt is prevented from being repaid.

Increases in oil prices in 1973 forced many poorer nations’ to borrow heavily to purchase essential supplies which is when much of the current levels of debt were amassed At the same time OPEC funds deposited in western banks provided a ready source of funds. A proportion of borrowed funds was lost to corruption , about one-fifth was spent on arms and a proportion went towards infrastructure and economic development financed by central governments.