NAM calls for substantial debt reduction
NAM calls for substantial debt reduction
JAKARTA (JP): The Non-Aligned Movement (NAM) wound up a three-
day meeting on external debt here yesterday by calling for
substantial exemptions in the external debts of least-developed
countries.
The meeting's chairman, Saleh Afiff, told reporters that the
substantial debt exemptions are the most appropriate approach for
solving the debt crises of developing countries.
"The meeting agreed that debt rescheduling has failed to
alleviate the heavy debt servicing burden, particularly if cut-
off dates are not sufficiently advanced," he said following the
meeting, which was attended by the movement's 31 least-developed
members.
Afiff, Indonesia's Coordinating Minister for Economy and
Finance, said the appeal, contained in the chairman's report
rather than in a joint statement, will be sent to donor countries
and multilateral financial institutions.
He said the NAM chairman would not put forward the proposal to
creditor countries and multilateral financial agencies in a
formal meeting but would, instead, encourage member countries to
strengthen bilateral cooperation with their creditors.
"The meeting put forward general principles in settling the
debt problem while the debt settlements will be carried out by
each borrowing country," he said.
The proposal was adopted from the report of the NAM's ad hoc
advisory group on debt, which urged lenders to reduce the debt of
least-developed countries by 70 percent through a case-by-case
approach.
In 1992, there were at least 58 heavily indebted countries, of
which 32 were classified as least-developed countries. The actual
arrears of the 32 countries were much larger than the 20 percent
threshold: 91 percent had arrears exceeding 50 percent, half had
arrears exceeding 86.7 percent and 39 percent had arrears in
excess of 90 percent.
The total long-term debt of those countries in 1992 amounted
to US$247.6 billion, 26 percent of which was owed to multilateral
financial institutions, 49 percent to governments and their
agencies and 24 percent to private creditors.
Afiff acknowledged that it would be difficult to convince the
lenders about the NAM's debt reduction proposal, especially to
multilateral financial agencies which mostly reject the debt cut
approach in solving the debt crisis.
"Unlike multilateral agencies, some donor countries have used
a debt reduction approach in dealing with debt problems," he
said.
Experience
Besides discussing the debt relief proposed by the NAM's
advisory group, the ministerial meeting also heard about
Indonesia's experience in handling its debt and managing its
economy.
Members of President Soeharto's team of experts, including
Widjojo Nitisastro, Ali Wardhana, Radius Prawiro, Mohammad Sadli,
Suhadi Mangkusuwondo and Emil Salim, were among the speakers at
the meeting.
Indonesia, which has foreign loans of some US$90 billion, has
been widely recognized for its successful debt management.
Afiff said that the meeting agreed that substantial debt
reductions alone would not result in economic growth and
development.
"The heavily indebted nations should seek to restore
macroeconomic stability through fiscal and monetary discipline if
they are to create the necessary preconditions for growth," he
said.
The meeting also expressed grave concern over the
proliferation of conditionalities attached to the transfer of
financial resources from developed countries and multilateral
financial institutions.
"While conditionalities related to the use of resources are
necessary and legitimate, the meeting rejected applying political
or other ideologically-motivated conditionalities," Afiff said.
"There is, thus, an urgent need to reduce the number and types
of conditionalities and to limit them to the essential objective
of financial assistance," he said.
The delegates of the meeting will attend a House of
Representatives (DPR) session today as well as the commemoration
of Independence Day tomorrow. (hen)