Rich nations renege on pledge to aid the LDCs
by Thalif Deen
New York, 24 Apr 2001 (IPS) - The world’s richest nations continue to renege on their pledges to provide increased development aid and debt relief to the world’s 49 Least Developed Countries (LDCs), the UN Conference on Trade and Development (UNCTAD) said Tuesday.
In its latest ‘Trade and Development Report, 2001’ released here, UNCTAD says that official development assistance (ODA) to LDCs amounted to only 0.05% of gross national product (GNP) from 1997 through 1999 - far short of the target ratio of 0.15% set at the Second UN Conference on LDCs in Paris in 1990.
“It is also only half of what it was at the beginning of the 1990s, in spite of the commitments by donors to increase aid to LDCs,” UNCTAD said.
According to UNCTAD, LDCs are the major “pockets of poverty” in the world economy. As domestic savings in these countries are insufficient to attain a faster pace of growth, they continue to depend on external finance, and especially on official capital flows, for the financing of their development.
But aggregate capital inflows fell in the 1990s, in real as well as in nominal terms, and in relation to the recipient countries’ GDP.
“Given their weak economic fundamentals and high-risk profiles, most LDCs have practically no direct access to international capital markets,” the report said.
Apart from insufficient inflows of capital, especially in the form of long-term credit and grants, the majority of LDCs continue to be burdened with serious debt problems.
In 1999, the outstanding external debt of LDCs as a share of their aggregate GDP amounted to 89%, and the average ratio of debt service paid (as opposed to scheduled payments) to exports was 15%. “A number of countries continued to be unable to meet their obligations in full, accumulating further arrears on scheduled payments,” UNCTAD noted.
Given their debt overhang, UNCTAD said, there is an urgent need to reduce the debt burden of LDCs. Among the 41 countries identified as Heavily Indebted Poor Countries (HIPCs), 31 are LDCs. –SUNS4883
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