Cross-Conditionality Banking Regulation and Third-World Debt

361 Pages·1992·43.931 MB·English

by  Ennio Rodríguez, Stephany Griffith-Jones (eds.)

Cross-Conditionality
Banking Regulation
and Third-World
Debt
EDITED BY
ENNIO RODRÍG UEZ
STEPHANY GRIFFITH-JONES
MACMILLAN INTERNATIONAL
POLITICAL ECONOMY SERIES
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THE POLITICAL ECONOMY OF FOREIGN POLICY IN SOUTHEAST ASIA
Cross-Conditionality
Banking Regulation
and Third-World
Debt
Edited by
Ennio Rodriguez
Project Coordinator.
Investment Programme/or Central America.
UN Commission/or Latin America and the Caribbean
and
Stephany Griffith-Jones
Fellow. Institute 0/ Development Studies.
University 0/ Sussex
© Ennio Rodriguez 1992
Softcover reprint of the hardcover 1st edition 1992
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First published 1992
Published by
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ISBN 978-1-349-12418-3 ISBN 978-1-349-12416-9 (eBook)
DOI 10.1007/978-1-349-12416-9
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Contents
List of Tables and Figures vii
List of Acronyms x
Preface xii
Notes on the Contributors xv
PART I BANKING REGULATIONS, THIRD
WORLD DEBT AND THE SPREAD OF
CROSS-CONDITIONALITY 1
1 The Political Economy of Banking Regulanons
Ennio Rodriguez 3
2 European Banking Regulations and Third-World
Debt: The Technical, Political and Institutional Issues
Stephany Griffith-Jones 28
3 Cross-conditionality or the Spread of Obligatory
Adjustment: A Review of the Issues and Questions for
Research
Stephany Griffith-Jones 52
PART II CASE STUDIES 85
4 Adjustment and Conditionality in Chile (1982-88)
Ricardo Ffrench-Davis 87
5 A Path in the Maze: Costa Rica, Cross-conditionality
and Development
Ennio Rodrtguez 120
6 Sweet Entanglement: Argentina and the World Bank
(1985-89)
Diana Tussie and Mirta Botzman 156
7 Cross-conditionality: The Case of Mexico and the
World Bank
Rene Villarreal 191
v
vi Contents
8 Cross-conditionality and Obligatory Adjustment in the
1980s: The Case of Tanzania
Joshua Doriye 227
9 Conditionalities and Cross-conditionalities in the
1980s: The Jamaican Experience
Sandra Henry 265
10 Conclusions
Ennio Rodr(guez and Stephany Griffith-Jones 323
Index 341
List of Tables and Figures
TABLES
1.1 Exposure of nine top US banks to twelve LDC
largest borrowers, 30 June 1983 5
1.2 Average reserves for LOC loans by creditor
country, 1987 15
1.3 Average reserves for LOC loans for top US banks,
June 1987 16
1.4 Tax and accounting treatment of loan-loss
reserves, 1989 23
2.1 Tax treatment and level of loan-loss reserves,
December 1988 34
2.2 Bank of England loan matrix provisions 43
3.1 Standby, extended, and structural adjustment
facility (SAF) agreements as of 31 October 1987 63
3.2 Policy components in SALs and in concurrent IMF
arrangements 70
3.3 Countries with IMF upper credit trade
arrangements, 31 October 1987 73
3.4 Types of policy measure requested in return for
SAL finance, 1980-0ctober 1986 77
4.1 Foreign debt of Chile, 1980-88 89
4.2 Real exchange rate and import tariffs: Chile,
1980-89 90
4.3 GOP, GOP per capita and investment: Chile,
1980-88 91
4.4 Quantitative performance criteria and outcome for
IMF standby and EFF: Chile, 1983-8 94
4.5 Net transfers by creditor, 1983-8 103
4.6 Production, consumption, investment and external
shocks per capita: Chile, 1980-88 107
5A.1 Costa Rica: external debt indicators, 1975, 1980-86 144
5A.2 Costa Rica: debt outstanding and disbursed, 1975,
1980-86 146
5A.3 Costa Rica: social indicators, 1950, 1963, 1973,
1984 and 1988 147
5A.4 Costa Rica: balance of payments, 1968-86 148
vii
viii List of Tables and Figures
5A.5 Costa Rica: composition of exports, 1980-88 150
5A.6 Costa Rica: inflation, unemployment and wages,
1975-88 151
5A.7 Total exports, traditional and non-traditional by
destination, 1965, 1970, 1975, 1980 and 1985
(US $ million) 152
5A.8a Total exports, traditional and non-traditional
by destination, 1965, 1970, 1975, 1980 and
1985 (%) 153
5A.8b Total exports, traditional and non-traditional by
destination, 1965, 1970, 1975, 1980 and 1985
(percentage by group) 154
5A.9 Non-traditional exports to third markets by
destination, 1980-87 155
6.1 Indicators of solvency in 1987 165
7.1 Mexico: terms of trade evolution 196
7.2 Evolution of internal and external adjustment
components: 1970-86 200
7.3 Mexico: evolution of financial service balance,
1976-86 201
7.4 Mexico's proposals on the foreign debt 201
7.5 Latin America and the Caribbean debt
rescheduling with private banks 203
7.6 Letters of intent signed with the International
Monetary Fund 204
7.7 IMF lending to Mexico 207
7.8 Summary of the basic issues of the negotiations
with Mexico's creditors, 1986-9 210
7.9 World Bank lending to Mexico conditionality
components 212
8.1 Indicators of economic and financial crisis 230
8.2 Factors affecting purchasing power of exports 233
8.3 Export crops - real producer prices 234
8.4 Fiscal policy performance 246
8.5 Actual credit expansion in relation to ceilings 248
8.6 Exchange rate regime during the programme 252
8.7 Real producer prices 254
8.8 Financing of imports during the programme period 262
9.1 Areas in which the Jamaican government promised
to carry out reforms 271
9.2 USAID economic assistance to Jamaica: 1981-7 274
List of Tables and Figures ix
9.3 Stabilisation measures under the IMF 278
9.4 Adjustment measures under the World Bank's
structural adjustment loans 279
9.5a The public enterprise sector adjustment
programme 282
9.5b Trade and financial sector adjustment loan 283
9.6 Jamaica: selected macroeconomic indicators,
1980-88 286
9A.l IMF agreements: 1981-7 319
9A.2 Financial sector reform 319
9A.3 World Bank SALs/SECALs 320
9A.4 SAL-related World Bank projects/credits 320
FIGURES
3.1 Options for countries starting from a position of
large negative resource transfers 59
7.1 Economic growth in Mexico, 1981-7 192
7.2 Inflation 193
7.3 Minimum wage: 1980-87 193
7.4 Income distribution: 1980-86 194
7.5 External debt and service costs 195
7.6 Percentage over or undervaluation of the Mexican
peso in three price indices 197
7.7 Current account balance quarterly, 1982.1-1988.4 197
7.8 Exports and imports, as a percentage of GDP 198
7.9 Savings and investment, as a percentage of GDP 199
7.10 Distribution of World Bank lending to Mexico 219