Loans and Aid:
Loans are sums of money that at some time in the future have to be paid back with interest. Aid is gifts of money, goods, food, machinery and trained workers. True aid is not a loan that needs to be repaid. However, in the real world "aid" really is a loan because some form of payback is required. Many people in the richer world want to relieve the poorer world of its debt burden.
Loans and their impacts:
A country in need of funds for development projects can borrow from other countries, world financial organisations or international banks. If the project is a success, the debt is repaid. However, often things don't go according to plana and the country defaults on the debt, which then has to be paid back over a longer period. People in the debtor country have to work hard to produce goods for export to fund the interest on the loan. Standard of living and level of development simply cannot improve.
Debt relief and abolition:
Poorer countries can be helped by debt relief. This means reducing the interest rate or the amount of loan. Sometimes debts are abolished or written off. Debtor nations (those who have borrowed) benefit hugely as they can begin to improve life for…