TransAfrica Forum Issue Brief
(Vol. 3, No. 4)
by TransAfrica Forum
Washington, DC, United States
Contents: THE INTERNATIONAL ECONOMIC CRISIS • REAGANWATCH: U.S. AID AND THE GLOBAL ECONOMIC CRISIS • INTERNATIONAL FINANCIAL INSTITUTIONS • This ISSUE BRIEF surveys the U.S. role in the development of multilateral financial institutions and the evolution of the international economic crisis. It begins with a point-counterpoint between Princeton Lyman, Deputy Assistant Secretary of State for Africa, and Robert Browne, Senior Research Fellow at Howard University's African Studies and Research Center, on the relative merits of a quintessential Reagan administration foreign aid proposal - the Economic Policy Initiative for Africa, (EPI). The world economic system's recent difficulties have been widely acknowledged; however, some would assert that, with the latest IMF-negotiated agreements to reschedule much of Latin America's $360 billion debt, the worst is over. Other experts disagree, citing several persisting symptoms of a continuing crisis. Per capita incomes in Africa are stagnant or falling, and Africa's $83 billion external debt is 25% of its total annual income. The Developing World currently spends at least half of its export earnings on debt service and pays more in interest than it receives in loans. The U.S. has enormous budgetary and trade deficits of its own. These experts therefore are convinced that a systemic problem exists. The World Bank Group and the International Monetary Fund (IMF) have dominated the post-World War II international economic system. The article explains the founding of the World Bank and IMF and how they operate, including the International Bank for Reconstruction and Development (IBRD), International Development Association (IDA), and International Finance Corporation (IFC). IMF members are assessed a contribution, or quota, which determines the size of its vote. The paid-in figure forms the initial basis for determining the amount it can borrow on demand; because developing nations have the smallest quotas and the largest credit needs, they resort to supplementary IMF facilities. The distinctive characteristic of this type of assistance is conditionality: nations must adopt specified austerity measures before receiving funds. The newsletter mentions the Lagos Plan of Action, the Berg Report, Assistant Secretary of State Chester Crocker, food self-sufficiency, incentive pricing in the agricultural sector, Agency for International Development (AID), Organisation for Economic Co-operation and Development (OECD), the Senate Foreign Relations Committee, economic support funds (ESF), structural adjustment lending (SAL), shortage of foreign exchange for basic imports, and TransAfrica Forum staff Niikwao Akuetteh, Cecelie Counts, Karrye Braxton, Hastings Jones, Menda Ahart, and Randall Robinson.
Used by permission of TramsAfrica Forum.
Collection: William Minter Southern Africa Papers