ABSTRACT
The New International Economic Order (NIEO) plan calls for “debt renegotiation on a case-by-case basis with a view to concluding agreements on debt cancellation, moratorium, rescheduling, or interest subsidization”. Since the time NIEO was declared in 1974, the international debt of less developed countries (LDCs) has approximately doubled. The chapter reviews the institutions that have been handling debt rescheduling, as well as the country cases since 1956. On the average, interest rates paid by LDCs on all external debts have been less than world inflation rates; hence, the average real rate is negative. Commercial borrowing by middle-income countries accounts for 79 percent of the LDC debt outstanding at the end of 1978. Expansionary policies in the 1950s, combined with a decline in export proceeds, led the government to impose tight controls on trade and payments. Price and exchange controls and restrictions on trade all reappeared during the 1970s, despite their failures in the 1950s and 1960s.
