World Economy

[nicelander]

Iceland recently declared itself bankrupt is seeking a multi million loan from the IMF. Reports state that it the first country to do so in 30 years, so which country was the last and found itself in this predicament back in the 1970s??? Many thanks.

[hadrianjeffs]

Not sure that any nation has ever been declared bankrupt in the strictly legal sense, but quite a few have been in the functional sense.

To all intents & purposes, France was bankrupt after the 1990-1991 Gulf War (mainly because of loss or expected revenue, some $20 billion, from arms sales to Baghdad) & was only able to operate its navy by means of "financial compensation" from Saudi Arabia.

Both Britain and Australia were also effectively bankrupt in the mid-1970's, the former resulting in the IMF having a veto over the 1974-1979 Labour government's spending plans in the middle of its term of office. Australia effectively bankrupted itself by pledging almost its entire mineral reserves to fund international loans, and being unable to repay from government revenue.

The only instance(s) I know of attempts to foreclose on a bankrupt nation both concerned Venezuela, in 1894 and 1904, when Britain & Germany threatened to send fleets to obtain overdue repayment of loans from Caracas. On both occassions the United States threatened Britain with war if it pursued the matter, and the 1894 incident lead to one of the rare cases of a genuine government cover-up of events, with British Admiralty records covering the episode being deliberately destroyed.