1887

Commodity Prices, Aid and Debt

Implications for LDCs, Small Vulnerable States and HIPCs

image of Commodity Prices, Aid and Debt

This study reveals the extent of persistent downward trends in commodity prices on least developed countries (LDCs), small vulnerable states (SVSs) and heavily indebted countries (HIPCs) and proposes a Joint Diversification Scheme exclusively for export diversification schemes in the commoditydependent poor countries. The report also proposes and outlines the establishment of a Joint Diversification Fund, in addition to regular aid flows as a longterm solution.

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Estimating Foreign Exchange Loss Due to Declining Commodity Prices

The sustained downward trend in relative prices of primary commodities has resulted in significant foreign exchange losses to most of the developing countries which rely on them for exports. Since export earnings determine a country's capacity to import, secular deterioration in the net barter terms of trade will imply reduced purchasing power of a given volume of commodity. In other words, there will be a net loss of foreign exchange from commodity exports.

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