NEED FOR A RADICAL SOLUTION TO THE PROBLEM OF DEBT IN THE DEVELOPING WORLD

Resolution adopted without a vote by the 88th Inter-Parliamentary Conference
(Stockholm, 12 September 1992)

The 88th Inter-Parliamentary Conference,

Deeply concerned by the persistence and aggravation of the debt problem in developing countries,

Noting that this debt now amounts to 42 per cent of the GNP of the countries concerned as against 37.7 per cent in 1982,

Conscious that throughout the world more than a billion people live in absolute poverty and that the high level of indebtedness of many developing countries constitutes a major hindrance to much-needed growth and sustainable development,

Mindful that the debt servicing of many countries exceeds their entire national budgets for education, housing, health and environmental programmes and related social and economic services, and consumes a disproportionately large percentage of their annual foreign exchange earnings, thus blocking much-needed funds for economic initiatives and human development needs,

Aware that international indebtedness has not only economic and financial consequences but also has a political dimension, blocks social progress in many developing countries, poses a threat to political stability and democratic development, aggravates conflicts between developing and industrialized countries and burdens international relations,

Concerned that the low level of savings worldwide poses a threat to the supply of capital needed by the Third World,

Conscious that, despite the success of many developing countries in dealing with their debt problems, the debt situation, particularly in a number of poorer developing countries, remains a source of considerable concern,

Deeply concerned at the regional conflicts which are exacerbating the existing economic and social problems in the areas affected and causing increasingly large refugee flows,

Mindful of the need to focus even more strongly on the challenges posed by North-South problems, and convinced that the debt crisis can be tackled efficiently within a global forum involving all parties concerned, creditors and debtors alike, since the continuing inability of debtor countries to honour their debt repayment obligations is a threat to the global economy,

Noting the interest which the Inter-Parliamentary Union has constantly displayed in development problems in general and in the North-South dialogue, and considering that the Union's statutory and specialized Conferences, which bring together representatives from North and South, provide a forum which is particularly well-suited to dialogue,

Expressing deep concern over the precarious situation of the international financial and monetary system, which has arisen, in particular, as a result of political changes in Central and Eastern Europe and adds to the already great responsibilities and financial burdens facing the international community,

Convinced that through debt cancellation, more careful management of limited natural resources and closer co-ordination of economic policies, existing imbalances can be reduced,

Conscious that women and children are particularly vulnerable to the side-effects of foreign debt escalation; that women are seriously affected by the current deterioration of the economic situation, and that children not only suffer from inefficient and inadequate education and health facilities but will be confronted in the future with the responsibility of repaying their parents' debts,

Concerned that the Uruguay Round of multilateral trade negotiations has been stalled for more than five years owing to a conflict of interests among the developed countries, thus perpetuating existing trade barriers to developing countries' exports and impairing the debtor countries' capacity to service their debts,

Taking note of the resolutions adopted by the United Nations with regard to the foreign debt problem of Third World countries,

Further taking note of past IPU resolutions and in particular the resolution of the 73rd Inter-Parliamentary Conference (Lome, 1985) on the role of parliaments and their contribution towards the elimination of poverty by alleviating the burden of international debt, and the resolution of the 74th Inter-Parliamentary Conference (Ottawa, 1985) on the contribution of parliaments to the search for measures and actions aimed at removing the burden of foreign debt that weighs on the developing countries,

1. Appeals to the governments and parliaments of the industrialized countries to undertake greater efforts to promote savings, to work with determination towards liberalizing trade in agriculture and eliminating protectionism and trade barriers and to bring the present GATT round to a successful conclusion;

2. Calls on donor countries to cancel official development assistance loans entirely or in part, to work towards alleviating the remaining debt burden, in exchange for firm commitments by recipient countries to environmental protection and political and economic reforms, and to encourage private banks to contribute more actively to finding lasting solutions to the debt problem;

3. Further calls on governments and parliaments to help strengthen the capacities of the International Monetary Fund, the International Bank for Reconstruction and Development (IBRD)/the World Bank and the regional development banks to resolve the debt crisis through the following measures in particular:

• In connection with its regulatory policy, the International Monetary Fund should focus on improving conditions for long-term growth and consequently, the prerequisites for more employment; IMF regulations must not be determined on the basis of economic criteria alone, but should also take into account social, ecological and political factors;
• The International Monetary Fund must include creditor-country policies in its control activities to a greater extent than in the past;
• Debtor-country military budgets must be included in IMF regulatory policy to a greater extent than in the past;

4. Requests that the IBRD/World Bank and the International Monetary Fund be equipped with parliamentary observer institutions to monitor their activities and ensure that their policies take into account co-responsibility between debtor and creditor countries, so as to:

• Promote sustainable, socially just and environmentally sound development in the Third World, with particular emphasis on human rights, democracy and reduced defense spending;
• Involve recipient countries, and in particular the populations concerned, at all stages of the planning and implementation of projects, thus ensuring that they include the essential "human dimension";

5. Calls on the governments and parliaments of developing countries to introduce market-oriented, socially committed and environmentally compatible economic systems and to guarantee protection of property, competition and market-based price-setting as well as freedom of trade and establishment;

6. Recommends that the governments and parliaments of developing countries undertake vigorous efforts to fight inflation, consolidate their budgets, stimulate private initiative and deregulate and liberalize their economies, and that they make full use of market-based options to resolve their debt problems without sacrificing or jeopardizing lasting, equitable and socially and ecologically rational development;

7. Calls on the governments of debtor countries to avoid show-case projects, develop policies for productive investment capable of attracting available local savings and take effective steps to combat capital flight;

8. Also calls on the government creditors represented in the Club of Paris to assess the possibility of extending debt relief efforts (debt forgiveness, rescheduling, new lending, easing of debt servicing, debt-conversion techniques, etc.) for low-income and/or other heavily indebted developing countries following the model of the successful rescheduling of the debts of Egypt and Poland;

9. Appeals to both developed and developing countries to encourage direct investment in debtor countries;

10. Expects the IBRD/World Bank and the International Monetary Fund to continue to assist the highly indebted poor developing countries in reducing their debts within the framework of their debt restructuring policies;

11. Reminds the governments of developed countries that the UN set an Official Development Assistance (ODA) goal of 0.7 per cent of GNP several years ago, and urges them to take the necessary steps to move closer to this goal;

12. Calls on the international community to support the efforts of developing countries to provide social security to the lowest-income groups while implementing economic stabilization and restructuring programmes, inter alia by providing appropriate technical and financial assistance;

13. Also calls on IPU members from donor countries to encourage high-level and active participation by their countries in the International Conference on Assistance to African Children to be held by the Organization of African Unity from 25-27 November 1992 in Dakar (Senegal);

14. Further calls on IPU members to encourage the relevant bilateral and multilateral institutions to provide additional resources that might be used to support further efforts in developing countries to promote child survival, protection and development;

15. Urges the international community and international organizations to intensify co-operation in all areas so that the gap between North and South and between East and West does not continue to widen and to support a corresponding policy of economic, social and ecological détente;

16. Calls on all governments and parliaments as well as all international organizations concerned to speed up implementation of the measures set out in the Paris Declaration and in the Programme of Action for the 1990s for the Least Developed Countries;

17. Recommends that, within the framework of the Union, an effective South-South Forum be established with the purpose of intensifying co-operation in the field of economic development among parliamentarians from the developing countries, in particular in their efforts to manage and alleviate the debt problem of their countries;

18. Also recommends that an effective system be set up, within the framework of the Support Committee to the North-South Dialogue and through the periodic reports of the National Groups, to monitor compliance with the recommendations and resolutions adopted by the forthcoming Inter-Parliamentary Conference on Third World Debt.