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The Least Developed Countries Report 2000

Aid, Private Capital Flows and External Debt - The Challenge of Financing Development in the LDCs

image of The Least Developed Countries Report 2000

What the world's poorest countries need most is not simply debt relief, but a 'New Deal' in international development cooperation, contends UNCTAD in its Least Developed Countries 2000 Report. Almost two thirds of the 48 least developed countries (LDCs) have an external debt burden, which is unsustainable according to international criteria. The report also states that past efforts to substantially decrease their debt service payments have failed, and recent attempts to finally resolve the debt problem through the Heavily Indebt Poor Countries (HIPC) Initiative are not very promising. The LDCs also looks at economic growth and social trends in the LDCs in the 1990s, financing development, and ways in which new approaches to partnerships can increase the effectiveness of aid.

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Structural adjustment, economic growth and the aid-debt service system

During the 1990s there were profound changes in the national policy environment in many LDCs. These changes were mainly brought about within the framework of structural adjustment programmes guided by the IMP and World Bank. The process began in the early 1980s with World Bank structural adjustment loans, but in general, LDCs were not in the vanguard of this movement. However, this situation changed radically following the introduction by the IMP of the Structural Adjustment Pacility (SAP) in March 1986 and its extension in September 1987 into the Enhanced Structural Adjustment Pacility (ESAP). Indeed, the ubiquity and scope of economic reforms undertaken in ESAP-supported programmes can be said to have been the main new feature of the LDC national policy environment in the 1990s.

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