Table Of ContentCross-Conditionality
Banking Regulation
and Third-World
Debt
EDITED BY
ENNIO RODRÍG UEZ
STEPHANY GRIFFITH-JONES
MACMILLAN INTERNATIONAL
POLITICAL ECONOMY SERIES
MACMILLAN INTERNATIONAL POLITICAL ECONOMY SERIES
General Editor: Timothy M. Shaw, Professor of Political Science and International
Development Studies, Dalhousie University, Nova Scotia, Canada
The global political economy is in a profound crisis at the levels of both production and
policy. This series provides overviews and case studies of states and sectors, classes and
companies, in the new international division of labour. These embrace political
economy as both focus and mode of analysis; they advance radical scholarship and
scenarios.
The series treats polity-economy dialectics at global, regional and national levels
and examines novel contradictions and coalitions between and within each. There is a
special emphasis on national bourgeoisies and capitalisms, on newly industrial or
influential countries, and on novel strategies and technologies. The concentration
throughout is on uneven patterns of power and production, authority and distribution,
hegemony and reaction. Attention will be paid to redefinitions of class and security,
basic needs and self-reliance and the range of critical analysis will include gender,
population, resources, environment, militarisation, food and finance. This series
constitutes a timely and distinctive response to the continuing intellectual and existen
tial world crisis.
Recent titles:
Alfredo Behrens
REGIONAL MANAGEMENT OF ENERGY RESOURCES IN LATIN AMERICA
Robert Boardman
PESTICIDES IN WORLD AGRICULTURE
THE SOVIET UNION AND THE WORLD ECONOMIC ORDER
Inga Brandell (editor)
WORKERS IN THIRD-WORLD INDUSTRIALIZATION
Bonnie K. Campbell (editor)
POLITICAL DIMENSIONS OF THE INTERNATIONAL DEBT CRISIS
Bonnie K. Campbell and John Loxley (editors)
STRUCTURAL ADJUSTMENT IN AFRICA
Jerker Carlsson and Timothy M. Shaw (editors)
NEWLY INDUSTRIALIZING COUNTRIES AND THE POLmCAL ECONOMY OF
SOUTH-SOUTH RELATIONS
O.P. Dwivedi
DEVELOPMENT ADMINISTRATION UNDER STRUCTURAL ADJUSTMENT
Tbyge Enevoldsen, Niels Fold and Steen Falke
SOUTH-SOUTH TRADE AND DEVELOPMENT
Diane Ethier (editor)
DEMOCRATIC TRANSmON AND CONSOLIDATION IN SOUTHERN EUROPE,
LATIN AMERICA AND SOUTHEAST ASIA
David P. Forsythe (editor)
HUMAN RIGHTS AND DEVELOPMENT
THE UNITED NATIONS IN THE WORLD POLmCAL ECONOMY
David Glover and Ken Kusterer
SMALL FARMERS, BIG BUSINESS
William D. Graf (editor)
THE INTERNATIONALIZATION OF THE GERMAN POLmCAL ECONOMY
Betty J. Harris
TIlE POLITICAL ECONOMY OF TIlE SOUTHERN AFRICAN PERIPHERY
Richard Higgott
AUSTRALIA AND THE GLOBAL ECONOMIC ORDER
Steven Kendall Holloway
THE ALUMINIUM MULTINATIONALS AND THE BAUXITE CARTEL
Bahgat Korany, Paul Noble and Rex Brynen (editors)
TIlE NEW FACE OF NATIONAL SECURITY IN THE ARAB WORLD
Guy Martin
TIlE EUROPEAN COMMUNITY AND TIlE TIlIRD WORLD AFTER 1992
Matthew Martin
TIlE CRUMBLING FAC;:ADE OF AFRICAN DEBT NEGOTIATIONS
James H. Mittebnan
OUT FROM UNDERDEVELOPMENT
Julius E. Okolo and Timothy M. Shaw (editors)
POLITICAL ECONOMY OF FOREIGN POLICY IN ECOWAS STATES
Dennis C. Pirages and Christine Sylvester (editors)
TRANSFORMATIONS IN TIlE GLOBAL POLmCAL ECONOMY
Stephen Riley (editor)
TIlE POLITICS OF GLOBAL DEBT
Garry Rodan
TIlE POLITICAL ECONOMY OF SINGAPORE'S INDUSTRIALIZATION
Ennio Rodriguez and Stephany Griffith-Jones (editors)
CROSS-CONDITIONALITY, BANKING REGULATION AND TIlIRD-WORLD DEBT
Jorge Rodriguez Beruff, J. Peter Figueroa and J. Edward Greene (editors)
CONFLICT, PEACE AND DEVELOPMENT IN TIlE CARIBBEAN
Patricia Ruffin
CAPITALISM AND SOCIALISM IN CUBA
Frederick Stapenhurst
POLITICAL RISK ANALYSIS AROUND TIlE NORTII ATLANTIC
Sharon B. Stichter and Jane L. Parpart (editors)
WOMEN, EMPLOYMENT AND THE FAMILY IN THE INTERNATIONAL DIVISION
OF LABOUR
Arno Tausch
TOWARDS A SOCIO-LIBERAL THEORY OF WORLD DEVELOPMENT
Peter Utting
ECONOMIC REFORM AND THIRD-WORLD SOCIALISM
Fiona Wilson
SWEATERS: GENDER, CLASS AND WORKSHOP-BASED INDUSTRY IN MEXICO
David Wurfel and Bruce Burton (editors)
THE POLITICAL ECONOMY OF FOREIGN POLICY IN SOUTHEAST ASIA
Cross-Conditionality
Banking Regulation
and Third-World
Debt
Edited by
Ennio Rodriguez
Project Coordinator.
Investment Programme/or Central America.
UN Commission/or Latin America and the Caribbean
and
Stephany Griffith-Jones
Fellow. Institute 0/ Development Studies.
University 0/ Sussex
© Ennio Rodriguez 1992
Softcover reprint of the hardcover 1st edition 1992
All rights reserved. No reproduction, copy or transmission
of this publication may be made without written permission.
No paragraph of this publication may be reproduced, copied or
transmitted save with written permission or in accordance with
the provisions of the Copyright, Designs and Patents Act 1988,
or under the terms of any licence permitting limited copying
issued by the Copyright Licensing Agency, 90 Tottenham Court
Road, London WIP 9HE.
Any person who does any unauthorised act in relation to
this publication may be liable to criminal prosecution and
civil claims for damages.
First published 1992
Published by
THE MACMILLAN PRESS LTD
Houndmills, Basingstoke, Hampshire R021 2XS
and London
Companies and representatives
throughout the world
ISBN 978-1-349-12418-3 ISBN 978-1-349-12416-9 (eBook)
DOI 10.1007/978-1-349-12416-9
A catalogue record for this book
is available from the British Library.
Series Standing Order (International Political Economy)
If you would like to receive future titles in this series as they
are published, you can make use of our standing order
facility. To place a standing order please contact your
bookseller or, in case of difficulty, write to us at the address
below with your name and address and the name of the
series. Please state with which'title you wish to begin your
standing order. (If you live outside the UK we may not have
the rights for your area, in which case we will fOrward your
order to the publisher concerned.)
Standing Order Service, Macmillan Distribution Ltd,
HoundmiIIs, Basingstoke, Hampshire, RG21 2XS, England
8765432
02 01 00 99 98 97 96
Contents
List of Tables and Figures vii
List of Acronyms x
Preface xii
Notes on the Contributors xv
PART I BANKING REGULATIONS, THIRD
WORLD DEBT AND THE SPREAD OF
CROSS-CONDITIONALITY 1
1 The Political Economy of Banking Regulanons
Ennio Rodriguez 3
2 European Banking Regulations and Third-World
Debt: The Technical, Political and Institutional Issues
Stephany Griffith-Jones 28
3 Cross-conditionality or the Spread of Obligatory
Adjustment: A Review of the Issues and Questions for
Research
Stephany Griffith-Jones 52
PART II CASE STUDIES 85
4 Adjustment and Conditionality in Chile (1982-88)
Ricardo Ffrench-Davis 87
5 A Path in the Maze: Costa Rica, Cross-conditionality
and Development
Ennio Rodrtguez 120
6 Sweet Entanglement: Argentina and the World Bank
(1985-89)
Diana Tussie and Mirta Botzman 156
7 Cross-conditionality: The Case of Mexico and the
World Bank
Rene Villarreal 191
v
vi Contents
8 Cross-conditionality and Obligatory Adjustment in the
1980s: The Case of Tanzania
Joshua Doriye 227
9 Conditionalities and Cross-conditionalities in the
1980s: The Jamaican Experience
Sandra Henry 265
10 Conclusions
Ennio Rodr(guez and Stephany Griffith-Jones 323
Index 341
List of Tables and Figures
TABLES
1.1 Exposure of nine top US banks to twelve LDC
largest borrowers, 30 June 1983 5
1.2 Average reserves for LOC loans by creditor
country, 1987 15
1.3 Average reserves for LOC loans for top US banks,
June 1987 16
1.4 Tax and accounting treatment of loan-loss
reserves, 1989 23
2.1 Tax treatment and level of loan-loss reserves,
December 1988 34
2.2 Bank of England loan matrix provisions 43
3.1 Standby, extended, and structural adjustment
facility (SAF) agreements as of 31 October 1987 63
3.2 Policy components in SALs and in concurrent IMF
arrangements 70
3.3 Countries with IMF upper credit trade
arrangements, 31 October 1987 73
3.4 Types of policy measure requested in return for
SAL finance, 1980-0ctober 1986 77
4.1 Foreign debt of Chile, 1980-88 89
4.2 Real exchange rate and import tariffs: Chile,
1980-89 90
4.3 GOP, GOP per capita and investment: Chile,
1980-88 91
4.4 Quantitative performance criteria and outcome for
IMF standby and EFF: Chile, 1983-8 94
4.5 Net transfers by creditor, 1983-8 103
4.6 Production, consumption, investment and external
shocks per capita: Chile, 1980-88 107
5A.1 Costa Rica: external debt indicators, 1975, 1980-86 144
5A.2 Costa Rica: debt outstanding and disbursed, 1975,
1980-86 146
5A.3 Costa Rica: social indicators, 1950, 1963, 1973,
1984 and 1988 147
5A.4 Costa Rica: balance of payments, 1968-86 148
vii
viii List of Tables and Figures
5A.5 Costa Rica: composition of exports, 1980-88 150
5A.6 Costa Rica: inflation, unemployment and wages,
1975-88 151
5A.7 Total exports, traditional and non-traditional by
destination, 1965, 1970, 1975, 1980 and 1985
(US $ million) 152
5A.8a Total exports, traditional and non-traditional
by destination, 1965, 1970, 1975, 1980 and
1985 (%) 153
5A.8b Total exports, traditional and non-traditional by
destination, 1965, 1970, 1975, 1980 and 1985
(percentage by group) 154
5A.9 Non-traditional exports to third markets by
destination, 1980-87 155
6.1 Indicators of solvency in 1987 165
7.1 Mexico: terms of trade evolution 196
7.2 Evolution of internal and external adjustment
components: 1970-86 200
7.3 Mexico: evolution of financial service balance,
1976-86 201
7.4 Mexico's proposals on the foreign debt 201
7.5 Latin America and the Caribbean debt
rescheduling with private banks 203
7.6 Letters of intent signed with the International
Monetary Fund 204
7.7 IMF lending to Mexico 207
7.8 Summary of the basic issues of the negotiations
with Mexico's creditors, 1986-9 210
7.9 World Bank lending to Mexico conditionality
components 212
8.1 Indicators of economic and financial crisis 230
8.2 Factors affecting purchasing power of exports 233
8.3 Export crops - real producer prices 234
8.4 Fiscal policy performance 246
8.5 Actual credit expansion in relation to ceilings 248
8.6 Exchange rate regime during the programme 252
8.7 Real producer prices 254
8.8 Financing of imports during the programme period 262
9.1 Areas in which the Jamaican government promised
to carry out reforms 271
9.2 USAID economic assistance to Jamaica: 1981-7 274
List of Tables and Figures ix
9.3 Stabilisation measures under the IMF 278
9.4 Adjustment measures under the World Bank's
structural adjustment loans 279
9.5a The public enterprise sector adjustment
programme 282
9.5b Trade and financial sector adjustment loan 283
9.6 Jamaica: selected macroeconomic indicators,
1980-88 286
9A.l IMF agreements: 1981-7 319
9A.2 Financial sector reform 319
9A.3 World Bank SALs/SECALs 320
9A.4 SAL-related World Bank projects/credits 320
FIGURES
3.1 Options for countries starting from a position of
large negative resource transfers 59
7.1 Economic growth in Mexico, 1981-7 192
7.2 Inflation 193
7.3 Minimum wage: 1980-87 193
7.4 Income distribution: 1980-86 194
7.5 External debt and service costs 195
7.6 Percentage over or undervaluation of the Mexican
peso in three price indices 197
7.7 Current account balance quarterly, 1982.1-1988.4 197
7.8 Exports and imports, as a percentage of GDP 198
7.9 Savings and investment, as a percentage of GDP 199
7.10 Distribution of World Bank lending to Mexico 219
