Mar 28, 1985
PROBLEMS NEED SOLUTIONS TO DEBT, AND MORE AID.
GENEVA, MARCH 27 (IFDA)— World economic growth needs not only solutions to trade policy problems, but also better financial policies, including systematic debt rescheduling and enhanced official development assistance to poorer countries, the group of eminent persons are advocated in their report to GATT.The health, and even the maintenance of the trading system, and the stability of the financial system, are linked to a satisfactory resolution of the world debt problem, adequate flows of development finance, better international coordination of macro-economic policies and greater consistency between trade and financial policies, the report argues. Expanded trade would not be enough to enable the indebted countries to service their debts, much less to get new funds needed to resume economic growth. As long as countries must limit imports and pay much of export earnings to banks, it is unlikely that they will be able to maintain economic growth or political stability over the long-term. A systematic rescheduling of the debts of these countries is needed, both in their own interests and that of the world economy as a whole. Trade alone cannot provide the majority of the Third World countries with a supply of capital adequate to their needs. For the poorer countries, particularly of sub-Saharan Africa, greatly increased aid flows on concessional terms are urgently needed. Multilateral flows through the World Bank and IDA, regional development Banks, and aid programmes of the UN and its agencies, as well as bilateral aid flows, should receive substantial and continuing reinforcement. There is also need for greater coordination of macro-economic policies internationally, to prevent exchange rate instability and encourage sustainable economic growth. The international consequences of changes in macro-economic policy must be incorporated into national policy decisions, and should be subject of more effective international consultations.