Message-ID: <Pine.A41.3.95.970113213215.29384F-100000@paris.NMSU.Edu> Date: Mon, 13 Jan 1997 21:58:12 -0700 From: JC WANDEMBERG <mailto:juwandem@NMSU.EDU> Subject: Re: Developing Countries' Options -Reply To: Multiple recipients of list DEVEL-L <mailto:DEVEL-L@AMERICAN.EDU>
On Mon, 13 Jan 1997, Jonathan Sanford wrote: snip> > I'm afraid you don't understand what the World Bank and IMF are. They are
> not controlled by commercial banks. Rather, they are controlled by national
> finance ministries of the governments that own them.
Dear Jonathan I'm afraid you are unaware of who controls the finance ministries. I worked for the Central Bank of Ecuador for 5 years and believe me creditors play the tune.
> The governments tend
> to take the view that debts should be repaid. This is a policy stance, not a
> capitulation to creditor interests.
I never argued for capitulation but against the usury rates used as well as the interest on interest in arrears.
> Furthermore, you need to look at recent events. Since the late 1989s, the
> IMF and World Bank have sponsored debt workout agreements for developing
> countries in which the creditors got back cents on the dollars.
No doubt, but this should not be taken as if they had lost money but rather as not making as much as expected!
>Brady Plan debt settlements have forgiven billions.
Sure, but again, forgiving billions was much better than getting nothing!
>But that is a different question from the one you raised, where you
> argue that the IMF and World Bank are leading the charge for full payment of
> all international debts. Not true.
I apologize for overstating it, I should have said : IMF and World Bank are leading the charge for AS MUCH as they can get!
> As far as the transfer of resources issue is concerned, you're always going to
> see debtors pay creditors more than they received. This is what interest
> does.
Of course, and I have no problem with that, what you clearly missed, or I failed to explain is that the lent monies were not properly monitored to ensure repayment. Debtor countries took as much as they could (quite irresponsibly and even corruptly of course) AND creditor banks just pumped in as much as they could also (also quite irresponsibly and corruptly) because they considered the risk of a country filing for bankruptcy were close to nil. In addition creditors did an "excellent" job keeping all debtors separated and dealing individually so as to avoid as much pressure at a time (if only Mexico and Brazil had joined efforts they could have had creditor banks on their knees.
Before Ecuador restructured is foreign debt through the Brady plan the country clearly could have NEVER paid its debt, and even though many millions were spared from payment by means of the PAR and Discount bonds the burden of the debt servicing will more than double in 2001. Unless the economy of the country grows by over 7 % during the next 4 years I see no way of servicing the debt without further asphixiating the lives of even more poor.
Regards, ************************************************************ |J.C. Wandemberg |
|Ph.D Graduate Researcher |
| |
| |
|INTERNATIONAL INSTITUTE FOR NATURAL, ENVIRONMENTAL |
|& CULTURAL RESOURCES MANAGEMENT (IIRM) |
|College of Agriculture & Home Economics (NMSU) |
|Box 30003, Dept. 3169, Las Cruces, NM 88003-003 USA |
|URL:http://www.nmsu.edu/~iirm E-Mail:mailto:juwandem@nmsu.edu |
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