|DEBT - A WORSENING SITUATION
by George Porter
Generally speaking, the situation has worsened for most developing countries, with more indebted countries now than in the 1980s. While some developing countries, at the price of considerable efforts, had been able to emerge from the debt trap, many more continue to be entrenched without any real prospect of emerging from the crisis.
The situation of low-income countries is particularly alarming. But indebtedness was not a privilege of low-income countries alone. It also affected, to the greatest degree, middle-income countries throughout the world.
The lack of significant developments in the debt crisis over the last decade confirmed the doubts raised by the UN Secretary-General's report calling into question the relevance and efficiency of measures and the assertion that the debt phenomenon had been fully mastered.
Initiatives aimed at reconversion and/or reduction of debt of certain countries, taken randomly, had been deficient because of their partial nature as well as the specific and often superficial character. They did not lay the basis for an overall policy aimed at encouraging a final solution to the foreign debt problem aimed at the recovery of debtor countries.
To be valid, any approach must tackle the foreign debt problem beyond its monetary and financial aspects alone, integrating in a global approach its economic, political and social dimensions, as well as the respective responsibilities.
The phenomenon of indebtedness is the result of an imbalance between the financial needs of the borrowing countries and the means to be able satisfy them and any attempt to correct this imbalance must reinforce their capacity for accumulation to finance their own development. It would be in vain to expect success from the structural adjustment programmes (SAPs) and rescheduling processes if these were not accompanied by a transformation of the mechanisms governing the structure of world economic relations.
The world economic context has to be adjusted, to take into account the interests of the developing countries through the establishment of an international commercial system which would generate additional financial resources, particularly by ensuring better renumeration for commodities, strengthening of official development assistance (ODA), and a greater flow of direct investment not generating debt and better access to science and technology to allow an expansion of the industrial bases and their productive activities in general.