US Initiative on Third World Debt

AT the annual IMF/World Bank meeting in Seoul, South Korea, early in October this year, the US Treasury Secretary, James A Baker, outlined a three-pronged approach to the third world debt problem. He described his proposals as constituting a 'Programme for Sustained Growth'. According to this programme, first and foremost, the debtor countries should agree to adopt market- oriented policies aimed at creating more flexible and productive economies. Secondly, official lending institutions should make additional lending in return for the readiness of the countries to pursue these domestic economic policies. Thirdly additional new lending by commercial banks should come once the first two parts of the strategy are in place.