Q. A country is said to be in debt trap if:

[A] It has to abide by the conditionality imposed by the International Monetary Funds.

[B] It is required to borrow money to make interest payments on outstanding loans.

[C] It has been refused loans or aide by creditors.

[D] The World Bank charges a very high rate of interest on outstanding as well as new loans:

Answer: B
Notes:

Debt trap

  • The debt trap is a situation where one is forced to over consume loans to repay your existing debts.
  • A Debt trap is a situation where you’re forced to take new loans in order to repay your existing debt obligations. And before you know what a debt trap is, you fall into a situation where the amount of debt you owe takes a turn for the worse and spirals out of control.

 

Source: ForumIAS

Blog
Academy
Community