Oct 10, 1986


NEW YORK OCTOBER 7 (IFDA/CHAKRAVARTHI RAGHAVAN) -- The Group of 77 Tuesday warned that a profound crisis had engulfed all spheres of the world economy and had brought the developing countries to the brink of social and political upheavals.

The chairman of the group, Ambassador Ignac Golob of Yugoslavia, told the UN's Second Committee (economic and financial) that protracted international economic crises could not be explained by criticizing the initiatives of developing countries.

Rather, the non-implementation of those concepts was one of the main reasons for the deterioration of the world economy.

Golob said it was in everybody's interest to initiate a preparatory process for an international conference on money and finance for development.

A long standing proposal for such a conference is still being strongly opposed by the U.S. and western industrialized nations. The United Nations, they say, is not the appropriate forum to discuss issues of money and finance.

The Ambassador told the committee that the group of 77 did not delude itself that the dramatically difficult problems of the world economy could be resolved rapidly and easily. But it would continue to insist that solutions be sought without delay.

Golob warned the committee that the situation was going from bad to worse. What could be done rather easily one year became more intricate and required more painful measures the next year, he said.

By the end of 1986, the third world debt is expected to reach the one trillion dollar mark -- nearly twice the total exports of goods and services of the developing nations.

Gross interest payments would amount to 65 billion dollars. The debt-to-export ratio of capital-importing developing countries had increased from 174 percent in 1982 to 210 percent in 1986.

Referring to the impotence of the General Assembly, Golob said nothing was being done in the Assembly either to stop those negative trends or to reverse them.

"That was the paradox of our times", he said. At the last Assembly Sessions, Golob pointed out, the group of 77 had initiated a number of actions on the most vital questions, encouraged by the positive statements of most of the heads of state or government who were at the UN for the 40th. anniversary celebrations.

But no agreement had been reached on any of its drafts on debt, on an international conference on money and finance, and other economic issues.

Unfortunately, Golob pointed out, some developed countries persisted in their opposition to any substantial action within the United Nations.

At the same time, he said, they were busily promoting their own cooperation and were trying to decide global issues of concern to all countries, particularly the developing ones.

Such conduct bred suspicion and mistrust and undermined the independence and sovereignty of other countries, he noted.

Golob also said there was no major sector of international economic relations that had not suffered from the departure from agreements reached earlier.

Though the development consensus contained in the concept of a new international economic order enjoyed general support, that support had been eroded and consensus was being denied.

The UN's Director-General for Development and International Economic Cooperation, Jean Ripert, told the committee that in the last 12 months a consensus seemed to have emerged on several areas relating to international economic cooperation.

Among them, he said, were a correction of the major imbalances in industrialized countries and a closer coordination in their individual economic policies which were an essential condition of stability.

While developing countries had to adjust their economies to changing conditions, such adjustment must take place in a context of growth.

The international community, he argued, should support that process by providing more open markets and ensuring an increased flow of finance.

A special effort needed to be made for low-income countries, particularly in Africa.

He also pointed out that developing countries needed an increased flow of finance. They could not grow if a substantial part of their savings continued to be devoted not to growth-oriented investment but to service their external debts.

In the case of African and low-income countries, debt write-off measures must be taken by governments, since a large part of the debt was official.

Ripert added that a more vigorous expansion of international trade was linked to global economic growth and to the contractual framework of commercial relations.

He said the importance of the agreement reached at the recent GATT meeting in Punta del Este should not be under-estimated, as it was not only a compromise between the key industrialized countries, but it also took into account the concerns of developing countries.