Document Type

Conference Paper

Publication Date

8-1-1989

Author Affiliation

The World Bank

Book or Conference Proceedings Title

Policy, Planning, and Research Working Paper Series

Conference Name

Dealing with the Debt Crisis

First Page

1

Last Page

33

Publisher

The World Bank

Keywords

Highly indebted countries, External debt, Development finance

Abstract / Description

The external financing prospects of 17 highly indebted countries for 1989-95 fall considerably short of the requirements if a steady rate of growth is to be achieved. The most significant shortfall is in commercial bank lending. Without adequate burden sharing, it is unlikely that official creditors, particularly the multilateral institutions, will assume a disproportionately large exposure in these countries. With sound adjustment policies in the debtor countries, a combination of concerted lending, debt reduction, reflows of flight capital, and some intermittent accumulation of interest arrears will be the principal means of financing. Some countries—such as Mexico, Venezuela, Nigeria, and Ecuador—need external finance to offset their worsening terms of trade; others need it to restore productive investment at reasonable levels. At least some countries should be able to work their way out of the debt crisis—because their resource requirements are feasible and commercial bank creditors will probably respond favorably. Others will have to balance the finance from official and private creditors. Others still will be unable, even under the most stringent conditions and most sensible policies, to grow out of their difficulties without some reduction in the stock or servicing of their debt.

Comments

Working paper prepared for the conference "Dealing with the Debt Crisis," a product of the Debt and International Finance Division, International Economics Department, The World Bank, August 1989. IH0035

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