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International Monetary Fund

Abstract

This paper focuses mainly on official bilateral and multilateral financing for countries that have rescheduled their debts to official bilateral creditors. In contrast to the approaches taken by private lenders, official creditors have continued to provide new financing on a large scale to countries with debt-servicing difficulties that implement adjustment and reform programs. Financial support bas been provided through a wide variety of instruments and channels. For the low-income rescheduling countries as a group, total financial assistance has been about as large as these countries' own export earnings in every year since 1986. The recent trends in official financing have important ramifications for developing countries. Access to external financing from official sources is likely to remain high for those countries whose adjustment and reform efforts provide assurances that resources will be used efficiently. Conversely, countries with uneven records of policy implementation (particularly as regards payments arrears) are likely to find difficulty in attracting financial support.

International Monetary Fund

Abstract

This paper focuses mainly on official bilateral and multilateral financing for countries that have rescheduled their debts to official bilateral creditors. In contrast to the approaches taken by private lenders, official creditors have continued to provide new financing on a large scale to countries with debt-servicing difficulties that implement adjustment and reform programs. Financial support bas been provided through a wide variety of instruments and channels. For the low-income rescheduling countries as a group, total financial assistance has been about as large as these countries' own export earnings in every year since 1986. The recent trends in official financing have important ramifications for developing countries. Access to external financing from official sources is likely to remain high for those countries whose adjustment and reform efforts provide assurances that resources will be used efficiently. Conversely, countries with uneven records of policy implementation (particularly as regards payments arrears) are likely to find difficulty in attracting financial support.

Mr. Jian-Ye Wang and Mr. Márcio Valério Ronci

Abstract

Trade finance has long been an important component of international financial flows. Firms in emerging market economies, in particular, rely heavily on bank-financed trade credits to support their export and import activities. This book examines why and how much trade finance flows decline during financial crises, with case studies of several Asian and Latin American countries. The authors draw from the analysis to present options for mitigating trade finance declines in the event of future crises.

Martin Shivnan

This paper describes what the limits to growth are. The paper highlights that many critical variables in global society—particularly population and industrial production—have been growing at a constant percentage rate so that, by now, the absolute increase each year is extremely large. Such increases will become increasingly unmanageable unless deliberate action is taken to prevent such exponential growth. The paper also underscores that physical resources—particularly cultivable land and nonrenewable minerals—and the earth’s capacity to “absorb” pollution are finite.

William R. Cline

Abstract

Are declines in externally provided trade credits a serious problem for a country’s crisis resolution efforts? My answer, in short, is yes. Trade credit lines are short term in nature and routinely rolled over under normal circumstances. However, when a country enters into a crisis, foreign lenders tend not to renew such credit lines for fear of being caught up in some form of suspension, or simply because of concern about greater default risk by firms now facing more difficult circumstances. Similarly, official bilateral export credit agencies also tend to curb lending during crises following general prudential guidelines.

Glen Hodgson

Abstract

Developing countries in financial crisis appears to be a recurring feature of the international financial system. For the purposes of this chapter a “crisis country” is defined as one that is unable to service its external debt obligations as scheduled and is experiencing other forms of severe economic stress (for example, a sharp currency devaluation, reserve depletion, fiscal and macroeconomic disequilibrium, etc.). While a framework has emerged for providing financial assistance and relief to crisis countries in an orderly fashion, with the IMF (and to a lesser degree the World Bank) at its center, it is certainly possible to consider enhancements to that framework. Maintaining or restoring access to trade credit is one possible enhancement. This chapter identifies institutional and economic policy constraints faced by export credit institutions when a crisis country needs trade credit. It points to transaction-based action that could be taken by external lenders and insurers to restart the flow of credit to crisis countries, and concludes with some observations on how multilateral policy changes could make the flow of trade-related credit to developing countries more sustainable.

Mr. Jian-Ye Wang and Mr. Márcio Valério Ronci

Abstract

Improving the access of developing countries to more plentiful and secure sources of trade financing, particularly in periods of financial or exchange rate crisis, has been a matter of concern for some time for developing-country members of the World Trade Organization (WTO). The issue was raised during the emerging markets financial crisis in 1997–98, and more recently was been discussed in the WTO General Council and in the WTO Working Group on Trade Debt.

Mr. Márcio Valério Ronci

Abstract

This chapter assesses the effect of constrained trade finance on trade flows in countries undergoing financial and balance of payments crises. Most of the countries that had a major external crisis had a significant trade contraction, while trade-related finance declined sharply (Figure 2.1).

Herman Mulder

Abstract

For emerging markets, international financing and capital flows are a double-edged sword: they carry tremendous potential for increased economic welfare, but at same time harbour many dangers. Crises over the past two decades have brought about sovereign defaults, moratoria and transfer/convertibility problems in many emerging-market countries, which have led to IMF-supported programs followed by reschedulings of the external sovereign debt of sovereign creditors (mainly Paris Club creditors). Also, the crises have affected the private sector, bringing about bankruptcies and severe social distress.

Peter Jacobs

Abstract

The Asian currency crises that began in mid-1997 brought intense pressure on Indonesia’s balance of payments. Although Bank Indonesia intervened in the foreign currency market and tightened liquidity by increasing interest rates, confidence was not quickly restored and capital outflows increased rapidly. As a result, gross foreign assets declined by $4.5 billion from $28.6 billion in July 1997 to $24.1 billion in November 1997.