The Debt Crisis and the World Economy

Report by a Commonwealth Group of Experts

image of The Debt Crisis and the World Economy
‘The message is clear. The present situation is not sustainable. The world’s financial safety is balanced on a knife-edge... There is no room for complacency. We sense rather that a recognition of the gravity of the issues and of the dangers posed by the debt crisis in an interdependent world is growing. Full expression is not always given to this recognition, perhaps because of fear seeming to aggravate matters. But the situation has now been reached where collective determination to take action is imperative. The knowledge that such determination has been mustered will itself be a factor for greater sustainability.’ – From the Report.

‘The capacity of developing countries to comply with demands by the IMF and banks for austerity measures has political limits. In the final analysis, these limits are represented by unrest and the threat of revolution. Before that point is reached, debtor countries will obviously refuse to meet the terms and conditions of contraction demanded of them; there is growing evidence that that point is fast approaching.’ – From the Foreword by Commonwealth Secretary-General Shridath Ramphal.



Developing Country Bank Debt, Rescheduling and the Major Debtors

In this chapter we review and evaluate the way in which the debt crisis has been managed so far as it affects the banks. There is a description and evaluation of the process of debt renegotiation as it has evolved in relation to the major debtors, and a discussion of various proposals for changing the procedures and terms of renegotiation. The chapter is concerned with the process by which the crisis has been handled in general, rather than with particular cases, but Appendix 2.1 gives a summary of the agreements negotiated since January 1983.


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