Relief and reform in third world debt

Abstract

This paper reviews the debt problem and argues that there is a need for wider financial reforms as well as debt relief. North-South dispute is best resolved through the development of agreed rules governing both debt relief and balance-of-payments financing for exogenously created shocks. The poorest countries require both debt relief and increased finance. Improved compensatory finance, more liberal supplementary finance and conditional repayment arrangements are recommended for all. The terms of new arrangements should be applied retroactively as debt relief. A new issue of special drawing rights is advocated for the financing of these relief and reform proposals.