Furthering international co-operation regarding the external debt problems

The General Assembly,

Reaffirming its resolution 41/202 of 8 December 1986 on strengthened international economic co-operation aimed at resolving external debt problems of developing countries,

Recalling the Final Act adopted by the United Nations Conference on Trade and Development at its seventh session,

Recalling Trade and Development Board resolutions 165 (S-IX) of 11 March 1978 and 222 (XXI) of 27 September 1980 and the relevant recommendations of the mid-term global review of progress towards the implementation of the Substantial New Programme of Action for the 1980s for the Least Developed Countries,

Concerned about the slowing down of the world economy in the 1980s and the persistence of large imbalances, which was noted at the meetings of the Interim Committee of the Board of Governors on the International Monetary System and the Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries in September 1987,

Recognizing that the continuing debt problems of developing countries have become a major obstacle that restricts their economic recovery and long-term development, thereby increasing the vulnerability of the international financial system and adversely affecting the ability of debtor countries to import and creditor countries to export and thereby their growth and employment performance,

Deeply concerned at the increasing debt burden and the deteriorating debt situation of African countries, which impede the recovery and development of the continent and the implementation of the United Nations Programme of Action for African Economic Recovery and Development 1986-1990,

Noting that there has been an evolving response from the international community to the debt problem, which recognizes the shared responsibility of namely, the main parties concerned, developing debtor countries, developed creditor countries, private and multilateral financial institutions,

Profoundly concerned that, despite significant efforts by developing countries to deal with the debt crisis, the desired results have not yet been achieved and therefore acknowledging the need for continued and evolving international co-operation, particularly to improve the international economic environment, in order to attain a lasting solution to the problems of indebtedness of developing countries,

Welcoming the report of the Secretary-General on the international debt situation in mid-1987,

1.         Endorses the policies and measures agreed upon and spelt out in section II.A of the Final Act adopted by the United Nations Conference on Trade and Development at its seventh session, entitled "Resources for development, including financial and related monetary questions";

2.         Expresses concern that external debt problems can pose a threat to economic, social and political stability in indebted countries;

3.         Stresses that debtor developing countries, creditor developed countries and international private and multilateral financial institutions should strengthen work on an evolving and growth- and development-oriented strategy, through continuous dialogue and shared responsibility, in order to attain a durable, equitable and mutually agreed solution to debt problems;

4.         Reiterates that specific measures to deal with the indebtedness of developing countries should pay particular regard to the relevant factors of the debt-servicing capacity of each individual country;

5.         Also reiterates that, in the present circumstances, adjustment efforts are needed on the part of all countries, collectively and individually, each country contributing to the common objective in accordance with its capacities and weight in the world economy;

6.         Reiterates that it is essential for the international economic environment to be made more stable and predictable in support of growth through efforts by the major market economy countries, including strengthened multilateral surveillance, aimed at correcting existing external and fiscal imbalances, promoting non-inflationary sustainable growth, lowering real rates of interest and making exchange rates more stable and markets more accessible;

7.         Further reiterates that it is essential for debtor developing countries to pursue and intensify their efforts to increase savings and investment, reduce inflation and improve efficiency, taking into account their own individual characteristics and the vulnerability of the poorer strata;

8.         Reiterates that it is essential that external financing from official and private sources be increased on appropriate terms and conditions in support of these efforts;

9.         Recognizes the competence of multilateral financial institutions and the need for providing them with the adequate resources and instruments necessary, inter#alia, to strengthen their contribution to attaining a durable, equitable and mutually agreed solution to the debt problems and, in this context, takes note with interest of:

(a)        The agreement on a substantial general capital increase for the World Bank;

(b)        The initiative by the Managing Director of the International Monetary Fund to increase substantially the resources of the Structural Adjustment Facility;

(c)        The work towards an increase of quotas in the context of the Ninth General Review of Quotas in the International Monetary Fund;

(d)        The proposal to enlarge the scope of the Compensatory Financing Facility by the creation of a new external contingency facility;

(e)        The ongoing examination of adjustment programmes and their supportive arrangements, including a comprehensive review of conditionality in the International Monetary Fund;

10.       Stresses that increased flexibility should be applied by the parties concerned in the development of innovative approaches to reduce the debt burden of developing countries, including, as appropriate, the identification of possible regulatory impediments, and that measures such as the introduction of various forms of new financial instruments and of formulas that do not add to the stock of debt, including those devised by banks and debtors to take advantage of discounts prevailing in the secondary market, should be further pursued, and emphasizes that banks should be encouraged to co-operate flexibly with debtor countries according to individual circumstances to achieve this end;

11.       Calls upon the international community to continue its efforts, in the context of official debt restructuring exercises, to take appropriate and realistic measures to reduce the burden of official debt, adapted to the specific needs and circumstances of individual countries, inter alia, so as to allow an adequate planning horizon and long-term adjustment; consideration should be given to unforeseen changes in a country's external payments;

12.       Urges the international community to give serious consideration to mutually agreed ways and means of assisting debtor developing countries faced with large and bunched debts to the multilateral financial institutions, taking into account the need for increased capital flows on terms adapted to their payment situation and the specific economic circumstances of individual countries;

13.       Calls upon the international community to intensify its efforts to provide the necessary resource flows to African countries, including increasing official development assistance in support of their reform efforts, and to continue its efforts to grant adequate terms of rescheduling and other effective debt relief measures, as appropriate, to alleviate the debt burden;

14.       Stresses that urgent specific actions in respect of the indebtedness of the least developed and poorest developing countries are required, as contained in the relevant provisions of the Final Act adopted by the the United Nations Conference on Trade and Development at its seventh session, including substantial increases of concessional finance, essentially in grant form;

15.       Recognizes that the problems of external indebtedness of some other countries with serious debt-servicing problems also give rise to concern, and invites all those involved to take into account, as appropriate, the above in addressing these problems;

16.       Stresses the importance of the expansion of world trade and the promotion of a climate conducive to the strengthening of an open and liberalized trading system, including, in particular, the improvement of market access for developing countries' exports, and, in this context, stresses the importance of ensuring effective observance of standstill and rollback commitments and the importance of promoting improved commodity markets;

17.       Requests the Secretary-General, in preparing the agenda for the next session of the Administrative Committee on Co-ordination, to propose that due priority be given to the consideration of the issue of the external debt crisis and development in the Committee's discussions of the international economic situation;

18.       Requests the Secretary-General to consult with the relevant bodies and eminent personalities to prepare a comprehensive report on the international debt situation, reviewing also ways and means of advancing the efforts towards finding a durable, equitable and mutually agreed solution to the debt problems of developing countries in the light of the relevant provisions of the Final Act adopted by the United Nations Conference on Trade and Development at its seventh session and of the present resolution, to be submitted to the General Assembly at its forty-third session.