ABSTRACT
The basic facts of the LDC debt problem are well known. There is general agreement on its proximate or immediate causes and there is widespread recognition that these debts cannot – indeed should not – be paid in the full measure of their face value. There is also agreement in opinion-setting quarters that measures must be taken to ensure new financing and to restore normal patterns of international capital movements from rich or mature creditors to new developing countries. There is less agreement concerning the underlying or basic reasons for the severity and persistence of the crisis which has particularly affected both the poor countries of sub-Sahara Africa and middle-income, semi-industrialized countries, most of them in Latin America. It was widely believed that the recovery of the industrialized world from the deep recession of 1981–82 combined with heroic adjustment measures undertaken by debtor countries in the early 1980s would enable them to 'export' themselves out of the crisis. Not so! The situation has substantially deteriorated since 1985 and the cost of stalled development rises exponentially with every year that passes.
