The Baker Plan for addressing the debt crisis was based on the assumption that

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The Baker Plan was based on the assumption that renewed lending by U.S. and European banks would restore growth and make the debt manageable. This would allow debtor countries to service their debt while implementing economic reforms that would lead to sustained growth and reduce the risk of default. The plan involved providing new loans to debtor countries along with debt reduction and rescheduling measures to make the debt burden more manageable. While forgiveness of some of the debt was inevitable, the plan sought to ensure that debt relief was tied to economic reforms and that debtor countries had a clear path toward debt sustainability.

The Baker Plan for Addressing the Debt Crisis Was Based