NAM calls for substantial debt reduction<\/p>\n
JAKARTA (JP): The Non-Aligned Movement (NAM) wound up a three-
\nday meeting on external debt here yesterday by calling for
\nsubstantial exemptions in the external debts of least-developed
\ncountries.<\/p>\n
The meeting's chairman, Saleh Afiff, told reporters that the
\nsubstantial debt exemptions are the most appropriate approach for
\nsolving the debt crises of developing countries.<\/p>\n
\"The meeting agreed that debt rescheduling has failed to
\nalleviate the heavy debt servicing burden, particularly if cut-
\noff dates are not sufficiently advanced,\" he said following the
\nmeeting, which was attended by the movement's 31 least-developed
\nmembers.<\/p>\n
Afiff, Indonesia's Coordinating Minister for Economy and
\nFinance, said the appeal, contained in the chairman's report
\nrather than in a joint statement, will be sent to donor countries
\nand multilateral financial institutions.<\/p>\n
He said the NAM chairman would not put forward the proposal to
\ncreditor countries and multilateral financial agencies in a
\nformal meeting but would, instead, encourage member countries to
\nstrengthen bilateral cooperation with their creditors.<\/p>\n
\"The meeting put forward general principles in settling the
\ndebt problem while the debt settlements will be carried out by
\neach borrowing country,\" he said.<\/p>\n
The proposal was adopted from the report of the NAM's ad hoc
\nadvisory group on debt, which urged lenders to reduce the debt of
\nleast-developed countries by 70 percent through a case-by-case
\napproach.<\/p>\n
In 1992, there were at least 58 heavily indebted countries, of
\nwhich 32 were classified as least-developed countries. The actual
\narrears of the 32 countries were much larger than the 20 percent
\nthreshold: 91 percent had arrears exceeding 50 percent, half had
\narrears exceeding 86.7 percent and 39 percent had arrears in
\nexcess of 90 percent.<\/p>\n
The total long-term debt of those countries in 1992 amounted
\nto US$247.6 billion, 26 percent of which was owed to multilateral
\nfinancial institutions, 49 percent to governments and their
\nagencies and 24 percent to private creditors.<\/p>\n
Afiff acknowledged that it would be difficult to convince the
\nlenders about the NAM's debt reduction proposal, especially to
\nmultilateral financial agencies which mostly reject the debt cut
\napproach in solving the debt crisis.<\/p>\n
\"Unlike multilateral agencies, some donor countries have used
\na debt reduction approach in dealing with debt problems,\" he
\nsaid.<\/p>\n
Experience<\/p>\n
Besides discussing the debt relief proposed by the NAM's
\nadvisory group, the ministerial meeting also heard about
\nIndonesia's experience in handling its debt and managing its
\neconomy.<\/p>\n
Members of President Soeharto's team of experts, including
\nWidjojo Nitisastro, Ali Wardhana, Radius Prawiro, Mohammad Sadli,
\nSuhadi Mangkusuwondo and Emil Salim, were among the speakers at
\nthe meeting.<\/p>\n
Indonesia, which has foreign loans of some US$90 billion, has
\nbeen widely recognized for its successful debt management.<\/p>\n
Afiff said that the meeting agreed that substantial debt
\nreductions alone would not result in economic growth and
\ndevelopment.<\/p>\n
\"The heavily indebted nations should seek to restore
\nmacroeconomic stability through fiscal and monetary discipline if
\nthey are to create the necessary preconditions for growth,\" he
\nsaid.<\/p>\n
The meeting also expressed grave concern over the
\nproliferation of conditionalities attached to the transfer of
\nfinancial resources from developed countries and multilateral
\nfinancial institutions.<\/p>\n
\"While conditionalities related to the use of resources are
\nnecessary and legitimate, the meeting rejected applying political
\nor other ideologically-motivated conditionalities,\" Afiff said.<\/p>\n
\"There is, thus, an urgent need to reduce the number and types
\nof conditionalities and to limit them to the essential objective
\nof financial assistance,\" he said.<\/p>\n
The delegates of the meeting will attend a House of
\nRepresentatives (DPR) session today as well as the commemoration
\nof Independence Day tomorrow. (hen)<\/p>",
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