Jul 25, 1987
UNCTAD-VII: SUBSTANTIAL DEBT RELIEF FOR LDCS URGED.GENEVA, JULY 23 (IFDA/CHAKRAVARTHI RAGHAVAN) Ė Special measures to provide substantial relief to the least developed countries in respect of their public and private debts has been suggested in a draft paper put forward by the chairman of the Committee on LDCS, Amb. Martin Huslid of Norway.The chairmanís paper, in the form of a draft report of the sessional Committee to the contact group of the president of the Conference, is now being discussed in an informal negotiating group within the Committee. The paper notes the worsening of the debt situation of the LDCS in the past few years, with debt to GDP or debt service to export rations rising to "unmanageable levels". It attributes it to the depressed export earnings of these countries, and views the debt burden now as a major hindrance to their development process. Industrialised countries who have not yet done so, the paper says, should fully implement the 1978 UNCTAD special board decision on the debt of poorer countries, and "cancel without exception all outstanding bilateral ODA loans of all LDCS". Third world countries who have provided concessional loans to LDCS, it suggests, should also consider extending similar debt relief measures to the LDCS. Interest rates on official and officially guaranteed loans should be lowered to IDA terms, and when appropriate there should be outright cancellation of such debts. As regards private debts, the paper calls for substantial and multi-year rescheduling on "favourable terms". Multilateral institutions are also asked to consider alleviation of debt burden of LDCS through suitable arrangements such as interest-subsidy and refinance schemes. The establishment of a special facility for debt relief to LDCS through suitable arrangements such as interest-subsidy and refinance schemes. The establishment of a special facility for debt relief to LDCS should also be actively considered. The paper also calls for increased concessional flows to LDCS, essentially in grant form, and debt relief measures to be supplemented by measures in other fields such as trade, commodities, etc. In other areas, the chairmanís draft calls for full and effective implementation of the 1981 substantial new programme of action (SNPA), and donor countries (who have not yet done so) making "best efforts" to attain the target of 0l.15 percent of their GNP as ODA to the LDCS as soon as possible and not later than 1990. The structural adjustment facility of the IMF, it suggests, should be tripled as requested by the IMF managing director, and the IMF should be invited to review the principles on which its conditionality rests, "so as to reflect the peculiar social, economic and political priorities of the LDCS". In the commodity sector, where the LDCS have suffered greatly from vulnerability to declines in prices of their basic commodity exports, the paper underlines the importance to LDCS of the integrated programme for commodities, both in respect of stabilisation and development measures. It calls for international support to efforts of LDCS to diversify their commodities sector, especially through market transparency and increased market access and reduced distortions as envisaged in the Uruguay round. As regards compensatory financing for shortfalls in commodity export earnings, the paper suggests full compensation to LDCS for all such shortfalls, by improving the IMF facility with provision for special treatment to LDCS through better coverage, subsidisation of interest payments, and longer repayment and grace periods. On the general issue of market access, the paper calls for improvements to GSP schemes to provide duty free access to exports of LDCS, elimination of quantitative restrictions and other non-tariff measures, flexible rules of origin, and institution of a simple duty- and quota-free system of imports of handmade products from these countries.