The Management of External Debt

The debt crisis of the 1980s means different things to different people. To some, it is the ultimate form of exploitation of developing countries by the debt-holding north. Others see it as a problem of portfolio management whose temporary aberrations during the 1970s have been largely overcome in a decade of restructuring. Treatments of the debt crisis easily fill not just bookshelves but entire libraries. While it is relatively easy to explain its origins, it proves more difficult to agree on remedies. Structural adjustment programmes, administered by the IFIs, distributed the costs of adjustment between creditors and debtors; hence, different groups stood to gain or lose from how deals were struck between official creditors, commercial banks and debtor governments. ‘Rescheduling’ was the buzzword during the first five years of the crisis; since 1989, ‘debt relief’ has been added to the vocabulary of what, in the USA, might be termed politically correct language. In 1992, ten years after the outbreak of the crisis in Latin America, Citibank’s principal troubleshooter, William Rhodes, sang the post-mortem: ‘the disaster that didn’t happen’ (1992, 17).1 Meanwhile, Third World leaders such as Julius Nyerere, chairman of the South Commission, worry that the 1990s will witness a yet more drastic submission of developing countries to the north’s financial prerogatives (South Centre 1992a). In short, interpretations and outlooks differ.