Nafziger Economic Development (4th ed)

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the debt crisis but can reduce debt burdens and commercial bankers’ justification for resisting increased exposure to debtor countries (Lessard and Williamson 1987; Williamson and Lessard 1987; Bank for International Settlements 1989:135–136; Naylor 1989:330–331).

DEFINITIONS

The many methods of exporting capital illegally include taking currency overseas, sometimes in a suitcase, directly investing black-market money, and false invoicing in trade documents. Which of the domestic holdings of foreign assets (property, equity investment, bonds, deposits, and money) should be classified as domestic capital flight rather than normal capital outflows? Defining capital flight as resident capital outflow makes it easier to conceptualize and measure than alternative definitions that characterize it as illegal, abnormal, or undesirable to government or due to overinvoicing imports or underinvoicing exports.1 Using the World Bank’s estimates of capital flight as equal to current account balance, net foreign direct investment, and changes in reserves and debt, the largest capital flights, 1976 to 1984, were from Argentina, Venezuela, Mexico, Indonesia, Syria, Egypt, and Nigeria, whereas net flights from Brazil (whose real devaluation in 1980 was substantial), South Korea (whose exchange rate remained close to a market-clearing rate), Colombia, and the Philippines were negative (Cumby and Levich 1987:27–67).

Whenever international capital markets are highly integrated and transaction costs are low, private individuals will have strong incentives to circumvent what appears to be arbitrary barriers to capital movements, as even the United States found in the 1960s when interest equalization taxes and foreign credit restraint programs resulted in Eurocurrency and Eurobond market expansion to satisfy the offshore demand for funds (Lessard and Williamson 1987).

CAUSES

Resident capital outflows result from differences in perceived risk-adjusted returns in source and haven countries. We can attribute these differences to slow growth, overvalued domestic currencies, high inflation rates, confiscatory taxation, discriminatory interest ceilings or taxes on residents, financial repression, default on government obligations, expected currency depreciation, limitations on convertibility, poor investment climate, or political instability in source countries, all exacerbated by the United States’ abandoning income taxation on nonresident bank-deposit interest and much other investment income and (in the early 1980s) paying high interest rates. In 1982, Mexico’s devaluation and inflation “almost totally wiped out the value of obligations denominated in Mexican pesos.” The domestic entrepreneurial energies lost from these policies were substantial (Williamson and Lessard 1987:21).

1 For European Bank for Reconstruction and Development economists Willem Buiter and Ivan Szegvari (2002), capital flight is a fuzzy concept that needs to be addressed from an economic policy, not criminal justice, perspective.

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A ZAIRIAN PATHOLOGY

Zaire, now Congo–Kinshasa, whose capital flight cannot be tracked statistically, is a blatant example of flight from LDCs desperately needing foreign exchange to resolve debt problems. Thus, foreign exchange from smuggling Zairian goods, such as diamonds, abroad is so widespread that a neighbor, Congo–Brazzaville, became a diamond exporter of some importance in the 1970s and early 1980s without having any diamond deposits! For two decades, Zaire stumbled from one debt crisis to another, lacking the capacity to pay debt service, which was $375–$625 million annually in the 1980s (Nafziger 1993:92–93; World Bank 1993g:Vol. 2, 500).

For Pierre Dikoba, Zairian President Mobutu Sese Seko’s “loot[ing] the country” explained the torn tin roof, malarial mosquitoes, and the lack of furniture, books, and pictures in the Kinshasa primary school where he taught in 1991 (Davison 1991:A11). In 1988, U.S. House Foreign Affairs Chair Howard Wolpe asserted: “Literally hundreds and hundreds of millions of dollars have vanished into the hands or bank accounts of the president and his collaborators” (Pound 1990:A4). Peter Korner and colleagues (1986:137) estimated Mobutu’s 1984 overseas wealth at $4 to $6 billion, invested in Swiss bank accounts and Western real estates, enough to solve Zaire’s debt crisis. Indeed, if Mobutu and his allies had not taken out of the country a large proportion of funds the Zairian government borrowed abroad, Zaire might not have had a debt crisis (Erbe 1985:268–275). In 1977, President Mobutu denounced the Zairian disease, stating that “everything is for sale, everything is bought in our country. And in this traffic, holding any slice of public power constitutes a veritable exchange instrument, convertible into illicit acquisition of other goods” (Lemarchand 1979:237–260).

Was Mobutu unique? Chapter 4 discussed predatory rulers and failed states, in which rulers and warlords profit more from political disorder than from order. This syndrome did not die with Mobutu in 1997.

HOW TO REDUCE FLIGHT

Source countries need robust growth, market-clearing exchange rates and other prices, an outward trade orientation, dependable positive real interest rates, fiscal reform (including lower taxes on capital gains), taxes on foreign assets as high as domestic assets, more efficient state enterprises, other market liberalization, supplyoriented adjustment measures, a resolution of the debt problem, and incorruptible government officials (Williamson and Lessard 1987:28–56). Haven countries can lower interest rates and cease tax discrimination favoring nonresident investment income, whereas their banks can refuse to accept funds from major LDC debtor countries.

Just listing policies for source and haven countries suggests the difficulty of the problem. For Rimmer de Vries (1987:188), capital flight is the caboose, not the locomotive, meaning that capital flight is symptomatic of the financial repression and economic underdevelopment at the root of the debt crisis, not the cause of it. We have another vicious circle – low growth, capital flight, and foreign exchange restrictions that hamper growth. Ironically, John Williamson and Donald R. Lessard (1987:57),

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despite recommendation of financial and exchange-rate liberalization, indicate that sometimes LDCs may have to use exchange controls, which limit domestic residents’ purchase of foreign currency, to limit the exodus of new savings. The Africa Research Bulletin (Economic Series, October 15, 1991, p. 10550) urges the United States to remove tax policies favoring nonresident bank deposits and Switzerland to lift secrecy protection for bank deposits (dubbed Africa’s second AIDS epidemic, “acquired Investments Deposited in Switzerland”) of African politicians and economic malfeasors facing judicial due process for criminal activity.

The Crisis from the U.S. Banking Perspective

U.S. regulations restricting interstate commercial bank activity and the rates that banks could pay for deposits enhanced incentives for American and European banks in the 1960s and 1970s to expand into the market for dollar deposits (or eurodollars, as discussed in Chapter 15) located in cities of Europe, East Asia, the Middle East, Nassau, Panama, Bahrain (and later New York City) that comprise a regulatory no-man’s-land. The successive waves of new U.S., European, and Japanese banks entering the eurocurrency market, with no reserve requirements, fueled credit expansion, especially in the 1970s. European, Japanese, and American regional banks challenging leading American bank domination sought new markets in the 1970s. After 1974, as capital-surplus oil-exporting countries recycled petrodollars to expand credit supply while Western demand for credit contracted, bankers viewed LDCs as a new frontier for lending. LDC borrowers were attractive, as they paid a premium over DC borrowers and were thought to pose little risk because borrower or guarantor governments, deemed incapable of bankruptcy, would service their debt. Ruling elites in Latin America and sub-Saharan Africa were lured by the use of easy bank credit to enhance coalition building while postponing large debt servicing for (perhaps) a future regime (Nafziger 1993:75).

During the 1980s, the inability of LDCs to pay its debt was a major international economic concern of American journalists and scholars. A complete writeoff of third world debts in the early 1980s would have wiped out many major U.S. commercial banks, which had more exposure to LDC debt than banks in any other country. Yet, in the early 1990s, the Harvard economist Benjamin Cohen (1991:47–51) asked: Whatever happened to the third world debt crisis? A partial answer is that, for LDCs, little has changed. In Africa, despite the HIPC (highly indebted poor countries) initiative, and in a few countries in Latin America, the debt overhang still keeps standards of living down and limits the investment needed to end stagnation. Meanwhile, however, LDC debt repudiation no longer threatens money-center banks of New York City, such as Citibank, Manufacturers Hanover, and JP Morgan Chase. These banks have reduced their exposure to third world borrowers, so their defaults endanger neither bank credit ratings and stock prices nor the stability of the U.S. banking system. The policy of the United States in the 1980s focused on saving its banks and averting a debtors’ cartel. By 1987, the major creditor banks no longer had to continue lending to LDCs or participate in debt rescheduling to forestall their own collapse. Thus,

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although the U.S. government and commercial banks have abandoned their preoccupation with the debt crisis, LDC debt generally does not fall, whereas the crisis has improved only a little in Africa and parts of Latin America.

During the 1980s, when commercial banks held 72 percent of Latin American debt, U.S. banks (holding 36 percent) and British banks, but few continental European banks, were vulnerable to Latin default. LDC debts to U.S. banks as a percentage of their capital grew from 110 percent in 1978 to 154 percent in 1982, before falling to 114 percent in 1986 and 63 percent in 1988. For the nine major U.S. banks, this percentage was even higher: 163 percent in 1978, 227 percent in 1982, 154 percent in 1986, and 198 percent in 1988.

Assume a bank’s LDC debt–capital ratio is 100 percent, and the bank writes off 60 percent of LDC debt but none of the other debts. If the loan–capital ratio is 1200 percent (this ratio typically varies between 1,000 and 1,700 percent for U.S. banks), then bad loans as a percentage of capital are at the precarious level of 5 (60/1,200) percent.

In response to nonperforming LDC loans and petrodollar shrinkage from low world oil prices, U.S. banks reduced their loans to oil-importing LDCs from $121 billion in 1982 to $118 billion in 1984 to $100 billion in 1986. Indeed, the United States, which ranked first in the world in commercial bank lending to LDCs from 1970 to 1983, fell to second place from 1984 to 1989, with only about half the loans of Japan. However, from 1989 to 1993, loans to LDCs no longer fell with their major loan restructuring. Also, U.S. bank exposure to LDC foreign debt declined in the mid-1980s from loan writeoffs, write-downs, and asset sales.2

In 1988, Latin American, Philippine, and Polish loans held by U.S. banks sold at a 40–70 percent discount on the second-hand market, indicating market expectation of partial default. Secondary market prices of bank debts of severely indebted countries (based on present value of debt service/annual GNP in excess of 80 percent or present value of debt service/annual export ratio more than 200 percent) (World Bank 1993g:Vol. 1, 165) ranged from 4 percent for Peru and 6 percent for Cote d’Ivoire to 24 percent for Nigeria to 64 percent for Chile. Steadily increasing discounts for LDC bank debt, the reduction of commercial lending to LDCs, and the increasing interest and principal arrears throughout the late 1980s indicate how much debtor countries’ creditworthiness had deteriorated.

Spreads and Risk Premiums

Commercial banks charge a risk premium for LDC borrowers, a premium that rises with major financial crises. This premium or spread may vary from interest rates 1–2 percentage points in excess of the London Interbank Offered Rate (LIBOR), a virtually riskless interest rate used as a standard for comparing other interest rates,

2Dornbusch (1986:63–86); “Debt Breakthrough,” Wall Street Journal (December 30, 1987): pp. 1, 4; Sewell, Tucker, and contributors (1988:231); Buiter and Srinivasan (1987:412); IMF Survey (January 25, 1988), p. 17, and (December 12, 1988), p. 385.

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FIGURE 16-1. Secondary-Market Spreads on Emerging Markets, 1990–2002. Note: Country names mark date of financial crisis. Source: World Bank 2003h:45.

to 15 percentage points (equal to 1500 basis points in Figure 16-1), 14 percentage points at the time of the Russian financial crisis, and lesser points for crises in Turkey, Argentina, and Brazil (Ghai 1991:2).3 U.S. banks learned their lesson in the 1980s, not repeating their exposure to LDC debt again.

The Crisis from the LDC Perspective

But although DC banks reduced their vulnerability to LDC bad debts in the late 1980s, 1990s, and early years of the 21st century, external LDC debt increased from more than $1 trillion in the late 1980s to $2.3 trillion in 2001. GNP per capita declined in Latin America and Africa during the 1980s, designated a “lost development decade.” Severely indebted countries (SICs) of the 1980s grew slower than countries of any debt classification, and more than one annual percentage point slower than LDCs generally. Indeed, from 1980 to 1985, a period of high interest rates and rapid accumulation of debt stock, annual real GNP per capita of lower income SICs, primarily from sub-Saharan Africa, fell sharply, by 4.6 percent. Even middleincome SICs’ real per capita GNP fell by 2.2 percent during the same period (World Bank 1993g:Vol. 1, 170–233; World Bank 1994i:162–213; United States Council for Economic Advisers 1990:236). In the 1990s, with increased debt negotiations, growth in severely indebted LDCs was not hampered so much.

In sub-Saharan Africa, the debt overhang contributed to the fall in health spending, child nutrition, and infant survival among the poor in the early 1980s, and the decline in real wages, employment rate, and health and educational expenditure shares in the late 1980s. In 1989, the Economic Commission for Africa’s Executive Secretary Adebayo Adedeji observed that Africa would not recover without lifting the “unbearable albatross” of debilitating debt burdens, low export prices, and net

3 One hundred basis points are equal to a 1-percentage point increase in interest rates. However, as Demirguc-Kunt and Detragiache (1994:261–285) point out, commercial lenders charged South Korea (in 1990, still classified as an LDC, with the ninth largest LDC debt), Indonesia, and Turkey lower interest rates than the market rate. Indeed, during the 1980s, these countries sometimes even paid interest rates below LIBOR. The three countries benefited from considerable official borrowing, with substantial concessional components, from DC donors.

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capital outflow (including capital transfer to the West by the wealthy and politically influential) (UNICEF 1989; Harsch 1989:47). About the same time, several African countries imposed debt service ceilings or debt moratoria, or simply defaulted on debt.

Debt crises have forced many countries to curtail poverty programs, even though few of these programs have been funded by foreign borrowing. In 1985, Tanzanian President Julius K. Nyerere asked, “Must we starve our children to pay our debt?” UNICEF (1989) found that child malnutrition increased and primary school enrollment rates declined in the 1980s in many least-developed countries as external debt constraints cut spending on services most needed by the poor.

Additionally, some Latin America countries, dominant among severely indebted middle-income countries, experienced deterioration in social indicators during the 1980s. In mid-1985, Peru’s President Alan Garcia limited debt payment to 10 percent of exports. Brazil’s President Sarney put a moratorium on interest payments for 12 months in February 1987, explaining his country’s impatience by indicating that “a debt paid with poverty is an account paid with democracy” (Ranis 1987:189–199; O’Donnell 1987:1157–1166). Creditors cut Brazil’s short-term credits, although the U.S. Federal Reserve and Treasury arranged a short-term debt settlement a year later (1988). At a meeting of leaders of debtor nations in late 1987, Argentine President Raul Alfonsin indicated that the West must recognize how “current economic conditions impede our development and condemn us to backwardness. We cannot accept that the south pay for the disequilibrium of the north.”

The debt and financial crises in Mexico (1994), Brazil (1998), Russia (1998), Turkey (2000), Argentina (2001), and Thailand, Indonesia, and Korea (1997) reduced output and increased poverty. All except Brazil and Russia had reduced GDP the year after the crisis; Argentina, Indonesia, and Thailand had a fall in GDP of more than 10 percent; and Turkey, Korea, and Mexico reduced output by more than 5 percent (Figure 16-2). Indonesia’s national poverty rate rose from 16 percent in 1996 to 27 percent in 1999 (World Bank 2003h:59).

In Argentina, the richest Latin American country in 2001 (inside front cover table), more than 15,000 workers, unemployed, and youth marched December 4, 2002, on the government palace in Buenos Aires in a “national march against hunger.” Studies had shown that seven of ten Argentine children “suffer from a serious lack of food” (Vann 2002). The number earning their living scavenging trash doubled in two years to about 40,000 of the 13 million people of greater Buenos Aires (Moffett 2002). Argentina’s collapse had a ripple effect on the Southern Cone Common Market (MERCOSUR) countries (Uruguay, Paraguay, and Brazil), contributing to a fall in Latin America and the Caribbean’s GDP per capita in both 2001 and 2002, the only LDC region experiencing reductions in both years.

In 1989, in response to increased poverty in adjusting countries, IMF Managing Director Michel Camdessus asserted:

The first [conviction] is that adjustment does not have to lower basic human standards. . . . My second conviction is that the more adjustment efforts give proper weight to social realities – especially the implications for the poorest – the more

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FIGURE 16-2. The Effect of the Financial Crises on Asian, Latino, Russian, and Turkish Real GDP Growth. Source: Fischer (2003:16), citing IMF, World Economic Outlook.

successful they are likely to be. . . . People know something about how to ensure that the very poor are spared by the adjustment effort. In financial terms, it might not cost very much. Why? Because if you look at the share of the poorest groups in the distribution of these [adjusting] countries income, it is a trifling amount. . . . Unfortunately it is generally “everyone else,” and not the poverty groups, that is represented in government. (quoted in Grant 1989:18–20)

Paul Mosley, Jane Harrigan, and John Toye (1991:Vol. 1, 54) observe that statements such as this by Camdessus “almost certainly exaggerate the extent to which the Fund at the operational level has moved or will move away from this traditional brief,” that is the required internal changes for restoration of a sustainable macroeconomic recovery. Indeed, the IMF (and World Bank) stress income distribution and basic needs in their publications but have few systematic studies of the effects of adjustment on poverty and income inequality and few programs to ensure that adjusting countries protect the income and social services of the poor. Bank and Fund adjustment programs may need to support income transfers for the poor, as most LDCs (except for upper-middle-income countries such as Brazil and Turkey) lack the resources to support these transfers. For example, in the poorest African countries, where the majority of the population lives close to subsistence, welfare payments to bring the population above the poverty line would undermine work incentives and be prohibitively expensive. The World Bank’s Social Dimensions of Adjustment Projects (SDA), discussed in Chapter 6, is a step toward compensating the poor for losses from adjustment programs (World Bank 2003f:8).

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Debt Indicators

The debt-service ratio is the interest and principal payments due in a given year on long-term debt divided by that year’s exports of goods and services. This ratio for LDCs increased from 9 percent in 1970 to 13 percent in 1979 to 18 percent in 1983 to 20 percent in 1986 to 23 percent in 1988 and 21 percent in 1989, before falling to 19 percent for each of the years, 1990 to 1993, and 18 percent in 2001 and 2002. The fall in the ratio from the late 1980s to the 1990s was a result of a slight shift from debt to portfolio investment financing, In 2001, LDC debt-service ratios were 33 percent in Latin America and the Caribbean, 18 percent in East and Central Europe and Central Asia, 12 percent in East Asia, Southeast Asia, and the Pacific, 12 percent in South Asia, 12 percent in sub-Saharan Africa, and 10 percent in the Middle East and North Africa (World Bank 2002a:222–249; World Bank 2003f:95–103).

The debt-service ratio for severely indebted middle-income countries was 70 percent, with an average ratio, 1999–2001, of 81 percent in Brazil, 67 percent in Argentina, and 50 percent in Lebanon. These percentages mean that at least half of annual export revenues must be devoted to paying interest and principle on debt, an unsustainable level. Not surprisingly, Argentina had to default and reschedule debt in 2001–03. Debt-service ratio was 19 percent in severely indebted lowincome countries, 12 percent in moderately indebted low-income countries, 16 percent in moderately indebted middle-income countries, and 13 percent for lesser indebted LDCs (World Bank 2002e:222–245), lower than Brazil and Argentina because of less access to credit. The severely indebted low-income countries’ and sub-Saharan ratios would have been higher except for the HIPC initiative at the millennium.

Indeed, debt-service ratios in sub-Saharan Africa during the 1980s and 1990s reflect substantial default and debt rescheduling and forgiveness. For example, in 1990, whereas Latin America’s actual debt-service ratio, 27 percent, exceeded the subSahara’s 24 percent, the sub-Sahara’s scheduled debt payments percentage, 66 percent, was more than twice Latin America’s 30 percent (World Bank 1993g:Vol. 1, 164–209; Nafziger 1993:16–17).

Another indicator of LDC debt burden, debt as a percentage of GNI, increased from 12 percent in 1970 to 24 percent in 1980 to 33 percent in 1984 to 37–40 percent from 1986 to 2001 debt/GNI was 71 percent in sub-Saharan Africa, 49 percent in Eastern Europe and Central Asia, 43 percent in East Asia, 33 percent Middle East, 29 percent in Latin America, and 24 percent in South Asia in 2001. When classified by external indebtedness and income levels, debt/GNI was 100 percent in severely indebted low-income countries, 79 percent in moderately indebted low-income countries, 58 percent in moderately indebted middle-income countries, and 51 percent in severely indebted middle-income countries in 2000 (World Bank 2000a:222; IMF 1988d:122– 32; Sachs 1988:17–26; World Bank 1988i:258–59; World Bank 1993g:Vol. 1, 33, 79–81, 170). (Countries are classified as severely, moderately, or less indebted countries on the basis of ratios of the present value of external debt to GNP and the present value of external debt to exports.)

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TABLE 16-2. Global Real GDP Growth, 1981–2003 (GDP in 1995 prices and exchange rates; average annual growth in percent)

	1981–1990	1991–2000	2001–2003a
Severely indebted LDCs	1.5	3.2	1.0
Moderately indebted LDCs	2.6	0.9	2.4
Less indebted LDCs	3.4	4.7	4.9
Developing countries	2.6	3.3	3.3
Middle income	2.3	3.3	3.1
Low income	4.2	3.1	4.3
High income	3.1	2.5	3.7

a Estimated.

Source: World Bank 2003h:187.

Net Transfers

Net transfers are net international resource flows (investment, loans, and grants) minus net international interest payments and profit remittances. As a result of substantial debt servicing, net transfers were negative from Latin America from 1986 to 1990 and from developing countries generally from 1986 to 1988.

Because the lion’s share of the poorest LDCs has been in sub-Saharan Africa, the majority of its net resources flows were concessional from 1984 through 2000, but not thereafter. This concessional aid contributed to positive net transfers in the subSahara every year from 1980 to 2000.

Still, the IMF received net transfers from sub-Saharan Africa, 1983 to 1993, as repayment obligations exceeded new loans, even though the Fund introduced concessional adjustment facilities in the late 1980s. During the same period, however, net transfers from the World Bank (including the International Development Association concessional window) to the sub-Sahara was large and positive every year, thus partially offsetting the Fund’s net transfer from the sub-Sahara. The World Bank’s aversion to negative net transfers to the most debt-distressed world region may be deliberate, even though the Bank refuses to confirm the policy, perhaps for fear of establishing a precedent (World Bank 1993g:Vol. 1, 171–232; Nafziger 1993:34, 211).

Major LDC Debtors

Who have been the major LDC debtors? In 2001, the leaders were Brazil ($226 billion), China ($170 billion), Mexico ($158 billion), Russia ($153 billion), Argentina ($137 billion), Indonesia ($136), Turkey ($136 billion), India ($97 billion), and Thailand ($67 billion). Except for China and India, who did not liberalize their capital markets, all have suffered from major financial and currency crises during the midto late 1990s. The 23 countries indicated in Table 16-3 accounted for 65 percent of total LDC debt. Yet none of these countries is least developed. Indeed,

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TABLE 16-3. Total External Public Debt (EDT) by Country – Less-Developed Countries, 1995–2001 ($ billions) ($10 billion or more in 2001, ranked by 2001 debt)

Country	1980	1985	1990	1995	1998	2001
Brazil	71	106	116	160	241	226
China	5	17	53	118	144	170
Mexico	57	97	106	167	160	158
Russian Federation	n.a.	n.a.	n.a.	122	178	153
Argentina	27	51	62	99	142	137
Indonesia	21	41	69	124	151	136
Turkey	19	26	49	74	97	115
India	21	41	69	94	98	97
Thailand	8	18	28	100	105	67
Poland	n.a.	33	49	44	56	62
Philippines	17	27	30	38	48	52
Malaysia	7	20	16	34	42	43
Chile	12	20	19	22	30	38
Colombia	7	14	17	25	33	37
Venezuela, R.B. de	29	35	33	36	37	35
Pakistan	10	13	21	30	32	32
Hungary	10	14	21	32	28	30
Egypt, Arab Rep. of	21	42	40	33	32	29
South Africa	n.a.	n.a.	n.a.	25	25	24
Algeria	19	18	28	33	31	23
Czech Rep.	n.a.	n.a.	n.a.	16	24	22
Lebanon	n.a.	n.a.	n.a.	3	7	12
Bulgaria	n.a.	4	11	10	10	10

Sources: World Bank 1993g:Vol. 1, 76–78; World Bank 1993g:Vol 2; World Bank 1990g:Vol. 1; World Bank 1990g:Vol. 2; World Bank 2003e:221.

middle-income countries accounted for 79 percent of the $2.2 trillion outstanding debt of LDCs in 2001. Only Indonesia and middle-income Argentina, Brazil, and Lebanon are classified as severely indebted. Severely indebted low-income countries such as the Democratic Republic of Congo, Cote d’Ivoire, Ethiopia, Nigeria, and Sierra Leone, which were not beneficiaries of Jubilee 2000 write-downs and concessional funds, have debt burdens more difficult to bear than the majority of those listed in Table 16-3.

Between January 1980 and December 2002, 78 LDCs (including transitional economies) renegotiated their foreign debts through multilateral agreements with official creditor groups (the Paris Club) or with commercial banks (under London Club auspices), lengthening or modifying repayment terms. These countries included most sub-Saharan countries, and the countries listed in Table 16-3, except for China, India, Malaysia, Thailand, Colombia, Hungary, South Africa, and Lebanon (World Bank 1993g:Vol. 1, 94–111; World Bank 2003e:142–155).