ABSTRACT

The lending policies of both the IMF and the World Bank include performance criteria relating also to trade policies of borrowing countries. The IMF's Annual Report 1985 on Exchange Arrangements and Exchange Restrictions notes a continued trend in many less-developed countries (LDCs) toward greater quantitative import restrictions affecting the import transaction itself. The international lending agencies, in particular the IMF and the World Bank, likewise emphasize that a durable solution of the debt crisis is not possible without promotion of economic efficiency, growth and rising export earnings of the indebted LDCs through liberal trade. Increased trade uncertainty and trade protectionism have adverse effects also on investments in the indebted LDCs and on their credit-worthiness, thereby impeding the flow of additional foreign capital into indebted countries. The chapter concludes that there are both economic and legal reasons for improving the rules and procedures of the GATT's balance-of-payments exceptions and for increasing the cooperation between the GATT and the World Bank.