Abstract
The Brady Plan is the first official proposal to give priority to a tangible reduction in the debtor countries' debt service burden and is thus a milestone along the path towards overcoming the international debt crisis. However, the instruments foreseen in the Plan virtually invite criticism and scepticism. What are the main inadequacies of the Brady Plan? How can the international debt strategy be developed further and made more effective?
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The great merit of Alfred Herrhausen, the Managing Director of Deutsche Bank who was murdered by terrorists on 30th November 1989, was that he was one of the first bankers to recognise this and to translate it into tangible recommendations for action. See in particular one of his last appeals for greater efforts to achieve both debt and debt service reduction “Die Zeit ist reif—Schuldenkrise am Wendepunkt”, in: Handelsblatt, No. 124 of 30th June/1st July 1989, p. 6.
See for example Morgan Guaranty Trust Company: LDC Debt Reduction: A Critical Appraisal, in: World Finacial Markets, December 1988, pp. 1–12.
On this and subsequent points, see especially Gerhard Maier: The Brady Plan—A Vicious Circle or a Way out of the Debt Crisis?, in: INTERECONOMICS, May/June 1989, pp. 116–119, and Michael Frenkel: The International Debt Problem: An Analysis of the Brady Plan, in: INTERECONOMICS, May/June 1989, pp. 110–116 and earlier studies taking a critical view of the effects of debt relief, such as John Williamson: Approaches to Debt Relief, Washington 1986; Morgan Guaranty Trust Company: Debt Relief or Market Solutions?, in: World Financial Markets, September 1986, pp. 1–11; Willem H. Buiter and T. N. Srinivasan: Rewarding the Profligate and Punishing the Prudent and Poor: Some Recent Proposals for Debt Relief, in: World Development, Vol. 15 (1987), pp. 411–417; John Williamson: Voluntary Approaches to Debt Relief, Washington 1988; Peter Nunnenkamp: Kapitalabflüsse aus der dritten Welt und Schuldenerlaß: Zu den Problemen des privaten Kapitaltransfers zwischen Industrie- und Entwicklungsländern, Kiel Discussion Papers, No. 139, Kiel 1988; and Jacob A. Frenkel, Michael P. Dooley and Peter Wickham (eds.): Analytical Issues in Debt, International Monetary Fund, Washington 1989.
See Jeffrey Sachs: Managing the LDC Debt Crisis, in: Brookings Papers on Economic Activity, Vol. 15 (1986), pp. 397–431.
See Stanley Fischer: Sharing the Burden of the Debt Crisis, in: Economic Impact, Vol. 60 (1987), pp. 28–31.
In this regard see the summary of the views by Pedro Pablo Kuczynski in: Pamela J. Bradley: Seminar on Latin America Focuses on Need for Policy Reform, in: IMF Survey, 13th November 1989, pp. 337–345.
A summary of the debate and of factual developments is to be found in, for example, John Williamson: The Lending Policies of the International Monetary Fund, Washington 1982; Stephan Haggard: The Politics of Adjustment: Lessons from the IMF's Extended Fund Facility, in: International Organization, Vol. 39 (1985), pp. 505–534; Henry S. Bienen and Mark Gersovitz: Economic Stabilization, Conditionality and Political Stability, in: International Organization, Vol. 39 (1985), pp. 729–754; veronika Büttner: The IMF's Adjustment Concept—A Strategy for a Permanent Solution to the Debt Crisis?, in: INTERECONOMICS, July/August 1985, pp. 168–174; and Scott R. Sidell: The IMF and Third-World Political Instability: Is There a Connection?, New York 1988.
Cf. Giovanni A. Cornia et al. (ed.): Adjustment with a Human Face: Protecting the Vulnerable and Promoting Growth, Oxford 1987.
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Schmidt, PG. How to pay for the debt — Coping with the Third World's crisis. Intereconomics 25, 6–12 (1990). https://doi.org/10.1007/BF02924753
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DOI: https://doi.org/10.1007/BF02924753