International credit

Since the end of World War II, the economic needs of war-devastated countries in many parts of the world have intensified the problems of international credit. Loans for the restoration of international trade and rehabilitation of industries were arranged through the International

Bank for Reconstruction and Development and the International Monetary Fund, organized by the United Nations Monetary and Financial Conference at Bretton Woods, New Hampshire, in 1944. Through loan agreements, Lend-Lease, and the Economic Cooperation Act of 1948, or the Marshall Plan, the U.S. made credit available to several European nations.

The extension of credit to developing countries of Africa, Asia, and South America by such institutions as the International Bank for Reconstruction and Development contributed to their economic growth.Two major new credit problems arose in the 1970s and early '80s. The roughly tenfold increase in international oil prices starting in 1973 led many nations to seek credit from any big credit institutions willing to grant it.

Borrowing to finance overambitious development plans was another factor in leaving a large number of nations with a heavy debt burden, which then became insupportable when interest rates rose and commodity export prices declined.