It's an ill wind that doesn't blow some good, and Hurricane Mitch is no exception. The disaster wreaked on Central America has at least focused minds on the need to alleviate the crippling debt owed by the very poorest nations on Earth.

Nicaragua and Honduras alone owe western banks and government $10.4 billion, and pay $2.2 million a day simply to service their debts. Unless their problems are addressed, they are doomed to spend most of the next century paying back loans given to build roads and bridges that no longer exist.

Mind-boggling statistics and abstruse economic terminology are a feature of the debate about debt. Most of us feel instinctive sympathy for the plight of Central America's homeless and bereaved and the poor of other developing countries. Yet we also believe that society is built on the rule that borrowers must repay their debts. So what are we to think?

The Third World debt problem differs from that of an average individual in several ways. The most obvious difference is scale - the poorest countries owe $2.2 trillion, or $2,200,000,000,000.

In addition, when we borrow we generally enjoy the fruits directly, in the form of a new car or house, for example. However, in most Third World countries the money was borrowed without the approval of the people. Much of it went on big infrastructural projects, on arms or into the pockets of corrupt rulers. Western firms were never far away, so the funding often flowed directly back to the place it came from. The poor generally saw nothing of the money they are now being asked to pay back.

This isn't the first time that countries have run up huge debts. The problem is that many poor countries owe so much now that paying off the interest eats into the funds they have for basic education, health and infrastructure.

If countries are earning enough foreign currency through exports and the capacity of the economy is being improved, debt isn't such a problem. The US is the world's biggest debtor but few bankers lose sleep over this.

Ireland, too, has a quite large foreign debt. In the past, when the economy was sluggish and unemployment was high, this was quite a problem and led to cutbacks in government spending. Today, when the economy is booming, the debt burden has receded as a factor in economic thinking. In many cases it is now clear that the money obtained by borrowing was put to good use, and helped to stimulate growth in the economy.

But in the Third World many countries borrowed too much in the 1970s and 1980s, and the money was invested badly. Africa is full of grandiose white-elephant projects, such as dams and railroads that are falling apart today. Investment often happened with the encouragement of western governments anxious to find new places to invest in.

Then the oil crisis hit. Western markets went into recession, and developing countries had no markets for their main exports. In many countries, corrupt dictators - Mobutu, Moi, Bokassa, Marcos, and many more - were busy siphoning loans into their personal bank accounts.

As their economies slowed down, developing countries found servicing their debts increasingly difficult. In 1980 they owed the rest of the world $600 billion; today, the figure stands at $2.2 trillion.

Africa's debt amounts to $222 billion, or 71 per cent of its yearly national output. Nigeria owes $31 billion and the Ivory Coast $20 billion.

Two-thirds of Africa's debt is owed to foreign governments and the international bankers in the World Bank and the International Monetary Fund. Ireland never had the resources in the 1970s and 1980s to start making loans to other countries, so we are not a creditor nation in any substantial way.

Bankers don't like bad debts and many of them realised that these growing debt mountains were bad for business. Between 1988 and 1994, some attempts were made to reduce or delay the debt burdens of the most indebted countries.

But this wasn't enough, and the figures continued to grow. So, in 1996, the World Bank and the IMF tried a new approach. Under the Highly Indebted Poor Countries (HIPC) initiative, creditors agreed to reduce the debt burdens of the worst affected nations to "sustainable" levels, so that debt repayments are not more than 25 per cent of export earnings.

The problem is that, in return, participating countries must agree to a three-year programme of IMF economic "reforms" - more precisely, cutbacks in public expenditure. Ireland went through something like this process to get the economy into better shape in the early 1990s and is doing so again in advance of the introduction of the euro.

However, the impact of this economic straitjacket on the enfeebled economies of the Third World has in many places been devastating. Schools and hospitals have been closed, infrastructures have been left to decay and the quality of life has deteriorated even further. Critics say one of the reasons Central America was so badly devastated was because governments were too preoccupied with repaying debt and making cutbacks to qualify for HIPC to notice that the weather protection systems were falling apart.

And HIPC is moving too slowly. Only Uganda has qualified for debt relief so far, though Bolivia, Burkina Faso and Guyana are due to qualify soon. Only 14 of the 41 countries identified by the World Bank will have undergone the three-year programme of economic reforms by the end of the millennium.

Earlier this year, Ireland opted to get involved in HIPC, by providing £14 million for debt relief in several African countries. But the decision was criticised by aid activists, who said that Ireland should be supporting the cancellation of unpayable debts instead of rowing in with IMF schemes which, they say, move so slowly and cause so much hardship in the Third World.

So what is to be done? Defaulting on loans is not an option, because poor countries simply lack the muscle to see this strategy through. But repayment is also out for the worst-affected countries, which can't even find the money to service the interest on their loans.

The HIPC initiative is a step in the right direction, but many believe now it is too modest and too slow. Support for an accelerated programme and for some form of "debt amnesty" is growing, and Hurricane Mitch has lent additional force to these calls.

After all, it has been done before. Germany had two-thirds of its war debts cut in 1953, and the result there was an economic miracle.