Special Report on Debt Crisis; Global Economic Growth Hampered by Debt Burden, but New Initiatives Offer Some Hope

UN Chronicle, March 1990 | Go to article overview

Special Report on Debt Crisis; Global Economic Growth Hampered by Debt Burden, but New Initiatives Offer Some Hope


Global economic growth hampered by debt burden., but new initiatives offer some hope

Massive external debt-presently estimated at 1.3 trillion-remains at the heart of the continuing economic woes suffered by some 70 UN Member States. The General Assembly lamented this seven-year crisis of developing countries, noting the "serious social consequences" and "unsatisfactory rates of growth of output and development" that accompany the debt burden.

A 14-paragraph resolution (44/205), adopted on 22 December by 139 votes to I (United States), emphasized the need for a durable solution to the debt problems" in developing countries. The Second Committee (Economic and Financial) debated the debt crisis over a four-day period.

The Assembly stated it welcomed recent debt reduction initiatives. It also called for a "more open international trading system", enhanced diversification of developing countries' exports, increased external resources and lower interest rates in developed countries.

In developing countries, a rise in savings and investment, reduction of inflation, and improved efficiency were urged. Industrialized countries should have "coherent and coordinated policies", aimed at addressing the "imbalances in the world economy", the Assembly emphasized. A proposal for a UN debt advisory commission was deferred for consideration at the forty-fifth session. The debt crisis stands at the centre of stagnant growth in Africa and deteriorating growth in Latin America, Secretary-General Javier Perez de Cuellar reported (A/44/628) on 16 October. He cited the unprecedented rise in negative net resource transfers from developing countries to $33 billion in 1988, up from $26 billion in 1987. Banks must now "recognize their losses", he continued, while troubled debtor countries need reform and adjustment. Political stability threatened Debt-ridden nations may also experience a threat to their "social and political stability", the Assembly warned in its omnibus text on debt. Addressing the Assembly's Third Committee (Social, Humanitarian and Cultural) on 9 October, Antoine Blanca, Director-General for Development and International Economic Co-operation, said that in the present period, it had not always been possible to distinguish between social damages from the prolonged economic decline" of developing countries and "the social costs of adjustment programmes" that were implemented because of balance-of-payments difficulties. Adjustment measures, such as currency devaluation, price decontrols and elimination of public subsidies, have "brought unbearable social costs", he explained, adding that "the resulting social tension mounted to the point of explosion" in several cases.

Some progress seen

Debt is a severe problem for subSaharan African nations, as well as for 17 highly indebted, middle income countries. The more than 400 million people of Latin America are particularly affected as two thirds of total external debt is owed by their countries.

The Assembly cited recent initiatives aimed at reducing the amount of debt and debt servicing owed by developing countries, as well as debt relief measures, as a "conceptual advance and important contribution to the efforts aimed at dealing with the debt crisis". …

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