ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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US Initiative on Third World Debt

AT the annual IMF/World Bank meeting in Seoul, South Korea, early in October this year, the US Treasury Secretary, James A Baker, outlined a three-pronged approach to the third world debt problem. He described his proposals as constituting a 'Programme for Sustained Growth'. According to this programme, first and foremost, the debtor countries should agree to adopt market- oriented policies aimed at creating more flexible and productive economies. Secondly, official lending institutions should make additional lending in return for the readiness of the countries to pursue these domestic economic policies. Thirdly additional new lending by commercial banks should come once the first two parts of the strategy are in place.

Flaws in Locomotive Theory

Flaws in Locomotive Theory I S G THERE is not much new about the locomotive theory. All that it says is that economic growth in certain countries provides the stimulus to other countries, through their exports to the former. Two aspects of the proposition need to be noted: (1) the growth process is mutually supportive

World Monetary Reform Core Issue Ignored

November 3, 1984 plains the present stagnation in the industry. The affinity for trading margins, exhibited by the manufacturers, has on the one hand been pushing up the foreign exchange outlay for electronic goods and components, and. on the other hand, has meant no serious efforts to reduce costs through innovations introduction. The high costs have in turn adversely affected the competitiveness of electronic exports and also dampened the growth in domestic demand.

Interest Rate Hike-Needed a Common Third World Stand

crisis-ridden structure by action from the top. The most important point for re-examination is the Section 112 of the CPI(M) Progamme. which really means the entire constitutionalist orientation of the party. Can it really undertake such a review7 This, of course, does not mean that the party's 'style of work' does not demand a second look. It really does and on a wide scale. To quote some glaring examples: should the CPI(M) transport minister have passed the time in the company of the fashionable crowd in the Eden Garden to watch a game of test cricket when the Congress (I) hoodlums were burn- ing buses and trams for hours and thus creating transport chaos? or should the chief minister have gone on his China trip leaving his junior and undistinguished colleagues to deal with the ravaging enteric epidemic which has so far taken a toll of over 2,000 lives? or, and even more important, should the Left Front government so zealously condone the atro cities of the police and remain largely indifferent to so many cases of suspicious death of undertrails in police custody?

US Arguments against SDRs

SUPPRESSION OF OPPOSITION The failures of development strategy coupled with ruthless personal dictatorship of Sekou Toure generated a considerable opposition to his regime. Sekou Toure opted to deal with his opponents by suppressing the dissent. Even the former Secretary General of the OAU named, Diallo Telli. was arrested in 1975 in an alleged plot to topple the Toure regime. Continuous harassment of the opposition compelled the regime's opponen's to take asylum in neighbouring states like Senegal and Ivory Coast. Human rights organisations constantly questioned Toure's rule, while Toure tried to answer his critics by raising the bogey of 'complot permenente' (permanent plots). According to this theory. to topple his regime a permanent plot was being hatched "by external reactionaries supported by paralysing manoeuvres of internal reactionaries".6 Due to the state of permanent plo's. Sekou Toure launched innumerable purges and went to the exent of accusing countries such as Ivory Coast, Senegal. Portugal. France. West Germany, and even the Soviet Union and he United States, at different stages, of attempting to top- ple his regime.

Technology Imports through NRIs

 present plight of the industry. The UPASI report claims that it is possible to achieve the production target of 125 million kg of tea by 2002 AD, through productivity gains (52 million kg) and an additional extension of area by 10,000 hectares (25 million kg). The main weakness of the report lies in its assessment of the amount of funds required and the available sources of these funds. First, the estimate of the amount required for the development programmes is unreasonably high; secondly, though the sources of funds are not clearly specified, it would appear that the major portion is expected to come from internal sources. Considering the policies adopted by the Indian companies which have bought over erstwhile British tea interests, one has to be skeptical about funds on this scale coming from internal sources, According to one study (Business Standard, March 18, 1983), tea plantations (including a major tea company in Kerala) top the list among 20 THE March 1984 issue of the USIS magazine. Span, published in India, carries the story of Jugi Tandon. an engineer originally from this country, who has made it to the top in the United States, His firm, Tandon Corporation of California, which he started in 1975, has been declared the Up and Comer of 1983, heading a list of 277 in Forbes magazine's annual ranking of the best small publicly held companies in the United States. An Up and Comer is defined as ''a smallish company that has an excellent chance of turning into a great company ... perhaps ultimately to join Forbes' list of of the 500 largest companies".

Financing Reagan s Deficit

Financing Reagan's Deficit I S G YOU make the Budget, especially the pre-election Budget, for the constituency you wish particularly to cultivate. This is probably what "Ronald Reagan too had in mind while presenting his 1984-85 Budget, envisaging - total spending of the order of $ 925 billion even though it entailed a deficit of $ 180 billion (i e, 20 per cent).

Our Rouble Reserves

Our Rouble Reserves I S G THE principal assumption underlying a bilateral payments arrangement is that the two countries entering into such an arrangement have broadly balanced trade between them. Then the need for the intermediation of a third country currency in the settlement of transactions is eliminated. In practice, this may not be always so. Not that bilateral payments arrangements altogether overlook this possibility. They usually provide for the eventual setllement of payments imbalances in third country currencies, but in not all such arrangements can this provision be easily invoked.

Bleak IDA-7 Prospects

Bleak IDA-7 Prospects I S G TO understand the current situation, let us start with a hit of past history. The sixth replenishment (IDA-6) of the International Development Association, the .soft loan window of the World Bank, was settled at $ 12 billion. This amount was to be contributed over a three-year period, 1980-81 to 1983? in successive tranches of at least 29 per cent, 33 per cent and 38 per cent of the total. The US contribution was fixed at $ 3.24 billion which works out to 27 per cent of the total amount to he raised. This itself was low in relative terms, being lower than the pro- portion of the US contribution to IDA replenishment in the past. Thus of the amounts of subscriptions and supplementary resources raised through IDA-o. the US contribution works out to 36 per cent.

The South Bank Proposal-Is OPEC Participation Critical

The South Bank Proposal Is OPEC Participation Critical? I S G ACCORDING to an UNCTAD study, completed around mid-1983 at the request of the Group of 77, a South Bank, ie, a bank of and for the developing countries, is needed and is possible. The study suggests that the proposed bank should have a total capital of $38 billion, of which $ 4.8 billion would be paid-up capital and the rest on cal] in case it is needed to meet the bank's obligations. Callable capital performs a guarantee function. It is suggested that of the paid-up capital, it would be desirable if $ 1.5 billion consisted of convertible foreign exchange; the rest would be contributed in local currency which should be for use by the bank without restrictions except for convertibility. Assuming a very conservative gearing rate of 1:1 between capital and: loam; raised by the bank, the bank should be ab.e to mobilise additional funds from the private capital market. With the capital resources it can thus command, the proposed bank, it is suggested, could ''make a significant contribution to the developing countries' growth, diversification and mutual co-operation". In specific terms, three sets of activities are envisaged for the proposed South Bank: (1) stimulating and helping to finance joint ventures and extending export credit; (2) extending balance of payments support, and (.3) providing support to payments and credit arrangements of developing countries and commodity stabilisation finance. By undertaking these activities, the bank would be able to not only promote and help streamline economic co-operation among developing countries but also fill some of the gaps in the present structure of international finance, gaps that particularly affect developing countries adversely.

IMF s Liquidity Gap

IMF's Liquidity Gap I S G SO the crunch has finally come. The International Monetary Fund has decided to suspend new negotiations on balance of payments support in view of, what has been described as, the Fund's "commitment gap". The timing of the suspension Ls itself bound to attract notice since it has occurred just before the Fund-Bank Annual Meeting. However, the Fund's 1983 Annual Report, released earlier this month, has been at pains to underline how the sharp escalation in the demands on its resources has "placed the Fund's financial resources under pressure". So the knowledgeable ones might well have guessed already what the "build up" in the Report was likely to lead to, or might even have been privy to the Fund's strategy. All the same, the matter the Fund's liquidity is serious enough to deserve notice regardless of the heroics. Let us rule out for our present purposes the possibility that the Fund action is an inspired stunt to pressurise the developing countries into inaction on issues of basic monetary reform or at least into an agreement on keeping the Fund supreme in the international financial arena.

Bleak IDA-7 Prospects

Bleak IDA-7 Prospects I S G TO understand the current situation, let us start with a bit of past history. The sixth replenishment (IDA-6) of the International Development Association, the soft loan window of the World Bank, was settled at $12 billion. This amount was to be contributed over a three-year period, 1980-81 to 1983, in successive tranches of at least 29 per cent, 33 per cent and 38 per cent of the total. The US contribution was fixed at $ 3.24 billion which works out to 27 per cent of the total amount to he raised. This itself was low in relative terms, being lower than the proportion of the US contribution to IDA replenishment in the past. Thus of the amounts of subscriptions and supplementary resources raised through IDA-5, the US contribution works out to 36 per cent.

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