Why does a country borrow money from the world bank even when they can afford it

[Pi-network314159]

Sometimes the real cause of why some countries still borrow money while dey can afford it, is Because of bad and greedy leaders. The causes of this things is when the leaders shear the money or alocation generated from government investment and tax, without saving the money or having emergency fund. When they leterarily spend all the money generated from government revenue without keeping some portions for other purposes. If they continue this strategy you see that the country will be poor and there reserved fund becomes minus, and leaders come and go without planing on how to pay the loan, rather think of borrowing and paying till the economy is messed up.

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[Text]

Governments need revenue to operate and fund services such as healthcare, education, and the military. This revenue usually comes from taxes paid by citizens and businesses and from levies on certain goods or duties on imports. However, when the spending of the government exceeds the income it earns, it leads to a condition called a deficit. To make up for this difference, the government needs to borrow money.

Similarly, when there is a desire for expansion or development in other projects or infrastructure, the government allocates a portion of its revenue for that purpose. If the allocated funds are not sufficient, the government resorts to borrowing to finance additional projects and improvements.

[Gozie51]

It is cheaper to borrow money than to run the cost of printing. For example if you want to print new currency in a country, it is not very cheap especially when the quantity you want to print can as well be given to you/country as borrow and you can quickly get onto the project that it is meant for. In order words, it is faster to use borrowed money to start a project than going through the legislative bottle kneck of printing money. Therefore, apart from the fact that it is cheaper in cost to printing money, it is faster to get things done with the money.

Another possible point is that it is targeted on a particular project or certain project which gives room for accountability assuming it was properly utilized without corruption and going into private pocket.

Another point again is that it makes lesser noise and doesn't raise curiosity in the public sphere only that money is being borrowed than when a government embarks on printing money. If government embarks on printing money, it creates more fear, doubt and uncertainty about what is happening to the economy of that country, perhaps they are being bankrupte or such kind of fear.

Government doesn't really like to print money or it is not really a good economic policy to print money if it is not expedient.

Then , when money is printed, it could increase the inflation rate if not properly managed and controlled. So, it is more serene to hear of borrowing than printing economically.

[Richbased]

To the best of my knowledge as regards to reasons why a government borrows money from world bank is as a result of economic crisis within that country so they actually use the money they borrowed to sort out some financial needs of the country not actually that the country doesn't have money but because the money they have in the Treasury isn't enough to settle all parastatals of government hence the reason for borrowing in other to keep the government running so that they can pay workers, build projects and fund other sectors of government in other to bring about development in the country pending when the government will generate enough revenues to pay back the loan they took.

Sometimes it isn't that the country doesn't have money to run the government but it might be that they want to do some extended budgets so in such a situation they can also result to taking loans in other to fund that particular budget. Yeah some countries that there economy is steady always have excess accounts, these excess accounts stands as for any other expenses outside the countries annual budgets so if their is any other further expenditures by the government then they can access the excess account.

A government that doesn't have good economic team can most times result to accumulating much debts due to borrowing from other countries and sometimes these debts are being inherited by their successors which will actually destabilize the successors government because instead of thinking ahead he might keep repaying debts incurred by previous administrations and incurring too many debts hinders the growth and development of a country.

[Gormicsta]

I am interested about this because in my country, we are independent and a productive country with revenues ought to be contented enough to execute the projects in demands of what they still borrows from the World Bank for and yet there is no economical improvements in the country instead we are running economical backwards.

The global economy is bad and all countries are affected at different degrees. So there is a good chance that despite being "independent and production" your country is also facing the economic crisis just like everyone else and needs some extra help.

Keep in mind that it is not necessarily a bad thing as long as there is production and the debt doesn't keep growing more than the real GDP can cover.

I completely agree because there will probably be some spillover effects from the worldwide recession, even in countries that are not directly affected. As you pointed out, there may be major issues later on if a nation's debt increases more quickly than its real GDP. It's important to keep in mind that, even if a nation can weather an economic storm, its trading partners might not be as fortunate. Therefore, even if a nation has a strong economy, the global recession may still have an impact on its exports.

[serjent05]

I am no expert about this topic, the thing I know why the government borrows money is to supplement their current and incoming budget to have a smooth operation of their programmed budget for the year activity.  In order to broaden the information I look for the answer on the internet and among those that I read I find this article[1] to answer @OP's question in a simple but clear manner.

The article stated that :

Essentially, the government borrows so that it can enable higher spending without having to increase taxes.

• The annual amount the government borrows is known as the budget deficit.
• The total amount the government has borrowed is known as the national debt or public sector debt.

This image from the article simply show the reason why the government borrow money:






[1] Why does the Government Borrow? by Tejvan Pettinger

[kentrolla]

I want to tell you an example of my country, it borrowed money from world bank in 2000 to build national highways and till date they are collecting toll charges from travelers stating it's to pay back the world bank for the loan which we had taken 24 years ago wherein no one has clarity how much has been paid and what's the remaining amount and when people started questioning they started dodging the questions stating it's for the maintenance of highway, etc some irrelevant reasons. It's just because they want more money and loan from world bank is just an excuse to collect more taxes from people. It's plain greed.

[_BlackStar]

There are many reasons why governments make loans to international financial institutions - mostly because they need to budget more than their domestic income from various sources. Sustainable project financing is the goal of why governments make loans - but unfortunately ineffective management backfires on a country to the point where they have difficulty repaying the loan.

Not all governments get loans by international institutions of their own wish- but in some cases these financial institutions also offer several special benefits to the government of a country in order to make a loan. Low interest rates, diplomatic relations and a few other things are also reasons - but in most cases, the government get the loans because it needs more funds.

[Fortify]

This might appear a mere or cranky question but yeee. Its been one of the interesting discussions raised by the average and vulnerable citizens in the country usually at when the masses feels the governments are playing over their intelligences and making caricature of them and yet this question keep staying questionable even after being answered.
Question: Why does the independent, developed and  productive countries still borrows money from the World Bank even when they have enough to execute their excused reasons given why they have to borrows the money?
I am interested about this because in my country, we are independent and a productive country with revenues ought to be contented enough to execute the projects in demands of what they still borrows from the World Bank for and yet there is no economical improvements in the country instead we are running economical backwards.

You say this is happening, and maybe it is, but why don't you give an example of these countries that are in such dire straits that they have to borrow when they can supposedly afford it already? I can't say I know of any examples, the world bank is the equivalent of a pay day lender, no government wants to go cap in hand to them as it admits their country has hit rock bottom. There are often some quite heavy strings attached to unlocking loans from the world bank, like concrete steps and law changes that could be very uncomfortable for certain established powers, like oligarchs who might have their little fiefdoms threatened and try to strike back at politicians. You might think you live in a productive country, but it's a race to the bottom and hard to be profitable these days.

[stadus]

There’s always a room for improvement, even if we are already seeing such countries in progress. The reason why most of the countries still taking a loan from the world bank so that they can continue providing their people the quality services that they deserve, like building more infrastructures that will cater the different needs of the people, and giving the people the continuous financial assistance most especially for those who are actually less unfortunate ones.

However, the officials personal interest to also benefit from the borrowed money is inevitable. Even if these people will deny it, but we all know as to where they are getting their funds to buy instant luxury cars and services for their own family benefits.

[DeathAngel]

They all will have their own reasons but mostly countries borrow from the World Bank because even if they have the financial capacity to pay for things without external assistance, borrowing from the World Bank allows them to access funds at lower interest rates and with longer repayment periods. This can be more favourable compared to borrowing from commercial lenders. The World Bank provides technical expertise & support to help countries implement projects effectively. Borrowing from the World Bank can signal credibility to other investors & lenders, attracting more investment & fostering economic growth.

[South Park]

This might appear a mere or cranky question but yeee. Its been one of the interesting discussions raised by the average and vulnerable citizens in the country usually at when the masses feels the governments are playing over their intelligences and making caricature of them and yet this question keep staying questionable even after being answered.
Question: Why does the independent, developed and  productive countries still borrows money from the World Bank even when they have enough to execute their excused reasons given why they have to borrows the money?
I am interested about this because in my country, we are independent and a productive country with revenues ought to be contented enough to execute the projects in demands of what they still borrows from the World Bank for and yet there is no economical improvements in the country instead we are running economical backwards.

There are too many reasons for this, the politicians in turn may want to build some public works that may need an amount of money they may not have at the moment, so borrowing money is a must for them, it may be argued that this is bad as if the money was saved then this could be done without getting new debt, but the benefits of building that project as soon as possible could be too good or politicians may want to build this during their administration, so in the future they can claim they are the ones that made this and give voters more reasons to elect them over their competition.

[ScamViruS]

It is actually very difficult to say, because it is a decision of the leaders of a country. Even after a country has enough money, they borrow money from the World Bank. World bank gives loan for development and this loan has many facilities which corporate banks will not give loan at this interest. And so the government tries to borrow money to expand the development of their country.

The government tries to provide more benefits to the citizens by subsidizing the taxpayers' money in other sectors, and that is why they are interested in borrowing money. But it is true that there are many conditions that have to be followed completely to take a loan from the world bank, as a result of which the problems that arise due to those conditions directly affect the citizens.

[Cryptomultiplier]

At least the countries can and individuals cannot. Perhaps it also has to do with how much foreign reserve the country has in store and as such it serves as a collateral to get loans from world banks who would make profit from the interest on the loans. Else, how do banks make profit.

It could also be the loans are sort of future investment from other countries to have an influence in the borrowing country in terms of their products and initiative being welcomed to flourish as well as investors coming in to set up businesses that would be of benefits to them and the borrowing nation .

Whatever be the case, the leaders are to be held in accountability for such decisions to get loans from the world bank even when they can afford it.

[btc78]

There are two reasons i can think of why countries who can afford some projects still choose to borrow from the world bank:

[1] It’s just not enough
Maybe the government has allotted the money for another project and they want to create another one however they are not quite sure if the money they have will be enough to execute the project so they borrow from the world bank

[2] Corrupt officials
It will really be not enough if the government officials seated on position are taking the money for themselves instead of trying to figure out a way to use it for the improvements of the country

[Maslate]

As much as we don’t see contentment with the progress we are seeing in ourselves, same also applied when running a country. There’s always a need to improve and that’s I think what every country is supposed to do. With that, taking a loan from the world bank could give us the best advantage aside that it only offers low interest funds, it could also mean a lot to continue the said progress and development that we are opted to see and experience in our own country. And I guess majority of the countries are exposed to taking a loan, as long as the country itself is able to pay it back from its own profit and revenues.

[sekalitas]

This might appear a mere or cranky question but yeee. Its been one of the interesting discussions raised by the average and vulnerable citizens in the country usually at when the masses feels the governments are playing over their intelligences and making caricature of them and yet this question keep staying questionable even after being answered.
Question: Why does the independent, developed and  productive countries still borrows money from the World Bank even when they have enough to execute their excused reasons given why they have to borrows the money?
I am interested about this because in my country, we are independent and a productive country with revenues ought to be contented enough to execute the projects in demands of what they still borrows from the World Bank for and yet there is no economical improvements in the country instead we are running economical backwards.

While I lack extensive knowledge on this topic, it's worth noting that countries, even those considered productive, sometimes borrow from the World Bank for various reasons. These include addressing budget shortfalls, financing new projects, or securing favorable loan terms. It's possible that even a productive nation might require additional resources to undertake specific projects beyond its current means.

[Natsuu]

Even if a country is doing well, sometimes borrowing money from the World Bank makes sense. It can be cheaper and they get expert advice along with the cash. It's a bit like taking a loan for a big project like you can get started sooner, spread out the risk and benefit from the bank's know-how. But if the borrowed money isn't managed wisely, that's when it might feel like things aren't improving despite having enough resources

[Zlantann]

Question: Why does the independent, developed and  productive countries still borrows money from the World Bank even when they have enough to execute their excused reasons given why they have to borrows the money?

Even the richest countries of the world sometimes face some economic problems that will force them to access loans. The reason for these loans is to help the country overcome the challenges. My country is facing high infrastructural deficits which has discouraged foreign investors from investing in my country. The government claimed they are taking loans to tackle these infrastructure problems to enable them to raise more taxes from foreign investors. The origin of loans could be traced to the devastating consequence of the World War. So nations also access loans to tackle natural and unnatural disasters.

I am interested about this because in my country, we are independent and a productive country with revenues ought to be contented enough to execute the projects in demands of what they still borrows from the World Bank for and yet there is no economical improvements in the country instead we are running economical backwards.

The difference between loans accessed by developed and underdeveloped countries is in the implementation or utilization of the loans. Most loans accessed by some developing countries end up in the pockets of corrupt politicians. And the nation will become a puppet of these world-loaning organizations like the World Bank and IMF. Most countries in Africa are heavily indebted because they misused the loans they got and cannot even service these loans. These nations are now heavily manipulated by these international lending organizations.

[Volimack]

The role of the government in borrowing is more for the development of a country, the government borrows from the World Bank. If the government does all its work properly then there will be no need to borrow. The World Bank never gives loans to anyone they are given loans based on different conditions. Even after taking loans many countries do not improve the countries are in a low position.