Thursday, 2 December 1999

From "Third World debt"

By Stuart Corbridge, in Companion to development studies, p. 478.

Faced with a 'scissors' crisis of declining exports to the US and Europe, and higher debt payments in a strengthening dollar, most of these countries [borrowing countries, esp. Latin American] sought to reschedule their debts (pay them back over a longer period, sometimes at higher rates of interest, and always for a fee) in the context of 'London Club' negotiations which brought debtors and creditors together with institutions like the World Bank and the International Monetary Fund (IMF). The IMF typically used these meetings to persuade the defaulting country to 'put its house in order' by agreeing to a structural adjestment programme. A standard programme involved currency devaluation, tax and public spending cuts, and incentives to support export-led growth.

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