Bolivar Default

In: Business and Management

Submitted By jwrubs
Words 392
Pages 2
The Bolivar Default Decision: Travesty or Turning Point?

I believe that the case essay is correct to stand behind President DiNardo’s decision to default on a large portion of foreign debt, mainly because the president’s reason to do so is clear: He cannot afford a slowdown of the nation’s economic recovery. On page 168, Ellet paraphrases the case essay’s arguments and numbers 3 and 5 make it clear that the president had no other choice. The third point was that “A suspension of interest payments on foreign debt made the measures [that started a small economic recovery] possible” (Ellet, 2007). If we flip this around, we can assume that without the extra money, the economic recovery would not be possible. The fifth argument follows the third in that it tells us that the “funding can be maintained from the unpaid debt (Ellet, 2007).

The case essay used 3 broad factors for its criteria: Economic, political, and social advantages and disadvantages. I think these criteria cover all of the potential effects that the country might encounter from a bond default.

The case study’s main qualification is that the money saved from the bond default be used for productive projects that are aligned with the country’s recovery efforts. The author makes a note of this in each of his paragraphs where he discusses the economic, political, and social factors. I think this is the most important theme of the case study; defaulting on the debt will turn out to be the wrong decision if the money is not used appropriately.

I think the action plan speaks well to the economic and political factors, but leaves out a concrete foundation on which to build social improvements. I think the plan should speak to increasing literacy rates, maybe by enforcing some type of education laws for children.

Overall, I agree with the author’s opinion that the president of Bolivar made the…...

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