Word: debtors
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...Debtor countries meet to set strategy for their confrontation with bankers
When ministers from eleven debtor countries met last week in Cartagena, Colombia, to devise a strategy for getting concessions from the banks, most of them maintained a conciliatory tone and rejected the idea of a cartel. Said Chilean Economy Minister Modesto Collados: "Each country is different. To negotiate in a club makes no sense at all." But the depth of Latin restiveness could hardly be concealed. In his opening speech, President Betancur compared Latin America's financial burden to the crushing debt and reparations problems after World War I, which helped wreck the international economy in the 1930s...
With meetings like last week's in Cartagena, the debtor countries are attempting to elevate the crisis beyond just a financial dispute with banks. They see the debt shock as a political issue in which the governments of the developed countries should be helping out those of the Third World. As a sign of their intention to raise the level of debate, delegations last week included foreign ministers in addition to finance ministers. Latin leaders point out that largely because of interest payments, their financial resources are being drained away to countries like the U.S. at the rate...
...ideas were deemed too visionary, and the fund's role was limited to helping member states-45 at the beginning, 146 today-ride out balance of payments difficulties. A country in deficit could apply to the IMF for low-interest loans. In return, the IMF required the debtor government to put its economic house in order. When the deficits were "structural," reflecting permanent changes in a country's terms of trade, such adjustments could be painful: currency devaluation, tax increases, reduced government spending, tight controls on monetary growth. But if the immediate impact was harsh, the long-term...
During their deliberations, the summit leaders were forced to give close attention to the international debt issue. All seven heads of government had received a letter from seven major debtor countries (Argentina, Venezuela, Peru, Colombia, Ecuador, Mexico and Brazil) expressing "anxiety," in the words of a British official, and the hope that the debt discussion be given "the right priority." The summit finally came up with a plan that a senior U.S. official said would "reward" debtors who are making "successful efforts to improve their position." The plan includes the notion of extending and improving the terms of debt repayment...