Developing countries owe more than $1,000 billion; solutions must be urgently sought.

Developing countries owe more than $1,000 billion; solutions must be urgently sought

The size of the external debt of developing countries -- more than $1,000 billion in 1987 -- continues to increase, Secretary-General Javier Perez de Cuellar has reported. Some $700 billion was owed to private creditors, mostly banks, and somewhat over $300 billion to official creditors, including international financial institutions. At the end of 1986, total debt amounted to twice the export earnings of capital-importing developing countries.

In his report of September 1987 on the persisting economic problem, the Secretary-General stated that solutions to external indebtedness of developing countries did not seem much nearer in mid-1987 than a year before. Some developments in the international economy might have dimmed such prospects. However, there were also indications of more realistic and pragmatic approaches that might facilitate correction of the debt overhang.

The debt-servicing burden of some countries -- already excessive in some cases -- was unsustainable, he said, raising the spectre of insolvency. International commercial banks were therefore understandably reluctant to increase their exposure to countries with debt problems.

While situations differed among countries, it was generally felt that the debt-service burden must be reduced by either lowering interest payments and related costs or by reducing actual debt levels, or both.

In a new resolution on 11 December 1987, Mr. Perez de Cuellar was asked by the General Assembly to prepare a comprehensive report on the international debt situation. He was also asked to review ways to advance towards finding a durable, equitable and mutually agreed solution to the debt problems of developing countries.

Some of the essential elements that the Assembly stipulated for a strategy for the solution of the debt problem were:

Debtor developing countries, creditor developed countries and international private and multilateral financial institutions should aim for growth- and development-oriented strategies, through continuous dialogue and shared...