Final answer:
Debt can make it difficult for a country to break out of poverty due to limited resources, dependence on creditors, and diversion of funds. To overcome this challenge, countries must focus on sustainable economic development and invest borrowed funds wisely.
Step-by-step explanation:
Debt can make it difficult for a country to break out of poverty due to several reasons:
- Limited resources: When a country has a high national debt, it often means that its government has limited resources to invest in programs and projects that could promote economic growth and alleviate poverty. The government may have to allocate a significant portion of its budget towards debt repayment, leaving less money for crucial expenses like education, healthcare, and infrastructure development.
- Dependence on creditors: Countries in debt often rely on creditors for loans and financial assistance. These creditors may impose conditions and prioritize their own interests over the country's development goals. This dependence can limit a country's policy autonomy and hinder its ability to implement effective measures to combat poverty.
- Diversion of funds: In some cases, corrupt politicians and administrators may misappropriate borrowed funds, leading to a situation where the country accumulates debt but sees little improvement in economic conditions. This not only exacerbates poverty but also erodes the public's trust in the government and undermines future borrowing prospects.
To break out of poverty, countries burdened with debt need to focus on sustainable economic development, reduce dependence on borrowing, promote good governance, and ensure that borrowed funds are invested wisely to stimulate productivity and alleviate poverty.