ABSTRACT
This chapter explores the treatment of the debt problem of the developing countries in the context of the North-South dialogue over the period 1974–80. The debate on Third World debt has a long history and it is far from over. The bank was set up to mobilize and on-lend funds at market rates of interest to enable countries to pay for capital goods imports. In 1949 the developing countries proposed the establishment of a United Nations (UN) fund for economic development that would make low-interest loans for a variety of development purposes. The claims on International Development Association (IDA) greatly exceeded the resources available. In 1964 Raoul Prebisch, the first secretary general of the United Nations Conference on Trade and Development (UNCTAD), drew attention to the growing burden of debt and the inadequacy of the procedures for debt rescheduling. In May 1974 the UN General Assembly convened its Sixth Special Session, which signaled a major turning point in North-South relations.
