Table Of ContentINTERNATIONAL POLITICAL ECONOMY SERIES
General Editor: Timothy M. Shaw, Professor of Political Science and International
Development Studies, Dalhousie University, Nova Scotia
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, c1asses and
companies in the new international division of labor. 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 nationa1.1evels 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 c1ass and security, basic needs and
self-reliance and the range of critical analysis will inc1ude gender, population, resources,
environment, militarisation, food and finance. This series constitutes a timely and
distinctive response to the continuing intellectual and existential world crisis.
Recent tit/es:
Robert Boardman
PESTICIDES IN WORLD AGRICUL TURE
Inga Brandell (editor)
WORKERS IN THIRD-WORLD INDUSTRIALIZATION
Bonnie K. Campbell (editor)
POLITICAL DIMENSIONS OF THE INTERNATIONAL DEBT CRISIS
Bonnie K. Campbell and lohn Loxley (editors)
STRUCTURAL ADJUSTMENT IN AFRICA
lecker Carlsson and Timothy M. Shaw (editors)
NEWL Y INDUSTRIALIZING COUNTRIES AND THE POLITICAL ECONOMY OF
SOUTH-SOUTH RELATIONS
David P. Forsythe (editor)
HUMAN RIGHTS AND DEVELOPMENT
THE UNITED NATIONS IN THE WORLD POLITICAL ECONOMY
David Glover and Ken Kusterer
SMALL FARMERS, BIG BUSINESS
William D. Graf (editor)
THE INTERNATIONALIZATION OF THE GERMAN POLITICAL ECONOMY
Steven Kendall Holloway
THE ALUMINIUM MULTINATIONALS AND THE BAUXITE CARTEL
Matthew Martin
THE CRUMBLING FA<;ADE OF AFRICAN DEBT NEGOTIATIONS
lames H. Mittelman
OUT FROM UNDERDEVELOPMENT
Dennis C. Pirages and Christine Sylvester (editors)
TRANSFORMATIONS IN THE GLOBAL POLITICAL ECONOMY
Garry Rodan
THE POLITICAL ECONOMY OF SINGAPORE'S INDUSTRIALIZATION
Ennio Rodriguez and Stephany Griffith-Jones (editors)
CROSS-CONDITIONALITY, BANKING REGULATION AND THIRD-WORLD DEBT
Jorge Rodriguez BerufT, J. Peter Figueroa and J. Edward Greene (editors)
CONFLICT, PEACE AND DEVELOPMENT IN THE CARIBBEAN
Patricia Ruffin
CAPIT ALISM AND SOCIALISM IN CUBA
Roger Southall (editor)
LABOUR AND UNIONS IN ASIA AND AFRICA
Arno Tausch
TOWARDS A SOCIO-LIBERAL THEORY OF WORLD DEVELOPMENT
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SWEATERS: GENDER, CLASS AND WORKSHOP-BASED INDUSTRY IN MEXICO
David Wurfel and Bruce Burton (editors)
THE POLITICAL ECONOMY OF FOREIGN POLICY IN SOUTHEAST ASIA
The Crumbling
Fa~ade
of African Debt
Negotiations
No Winners
Matthew Martin
International Development Centre, University of Oxford
Palgrave Macmillan
ISBN 978-1-349-12327-8 ISBN 978-1-349-12325-4 (eBook)
DOI 10.1007/978-1-349-12325-4
© Matthew Martin, 1991
Softcover reprint of the hardcover 1s t edition 1991
All rights reserved. For information, write:
Scholarly and Reference Division,
St. Martin's Press, Inc., 175 Fifth Avenue,
New York, N.Y. 10010
First published in the United States of America in 1991
ISBN 978-0-312-06734-2
Library of Congress Cataloging-in-Publication Data
Martin, Matthew.
The crumbling fa~ade of African debt negotiations: no winners(
Matthew Martin.
p. cm.-(lnternational political economy series)
Inc1udes bibliographical references and index.
ISBN 978-0-312-06734-2
1. Debts, External-Africa, Sub-Saharan. 2. Loans, Foreign
-Africa, Sub-Saharan. I. Title. II. Series.
HJ8826.M37 1991
336.3'435'0967--dc20 91-4014
CIP
Contents
List 0/ Maps, Tables and Figures Vll
Acknowledgements ix
Acronyms and Abbreviations x
Map: The Peters Projection 0/ A/rica xiv
1 Introduetion 1
l.l Why Write About Sub-Saharan Africa's Debt ? 1
1.2 What Have Others Said About Debt Negotiations ? 12
1.3 What This Book Says, and How It Says It 14
PART I TALKS
2 Negotiating Economic Poliey with the IMF 25
2.1 Before the Negotiations 27
2.2 Factors in the Negotiations 31
2.3 Outcome of the Negotiations 51
2.4 Approval of Programmes 60
2.5 Negotiations during Programmes 67
2.6 Conc1usion: No Winners 89
3 Debt to Governments: The Paris Club 95
3.1 Before the Negotiations 96
3.2 Factors in the Multilateral Negotiations 104
3.3 Outcome of the Multilateral Negotiations 118
3.4 Follow-up Bilateral Meetings 133
3.5 Implementation Problems 140
3.6 Conc1usion: No Winners 148
4 Debt to Commercial Banks: The London Club 152
4.1 Before the Negotiations 153
4.2 Factors in the Negotiations 162
4.3 Outcome of the Negotiations 176
4.4 Approval 193
4.5 Implementation Problems 201
4.6 Conc1usion: No Winners 206
v
VI Contents
5 Non-Bank Commercial Debt Negotiations 210
5.1 Initiating Talks and Choosing a Scheme 211
5.2 IMF Programme Repayment Targets 212
5.3 Refinancing 214
5.4 Bilateral Rescheduling 216
5.5 Rescheduling with Promissory Notes 217
5.6 Rescheduling through Multilateral Clubs 229
5.7 Debt Conversion and Reinvestment Plans 233
5.8 Unilateral Creditor Actions 237
5.9 Conclusion: No Winners 241
PART 11 WIDER ISSUES
6 Financing Adjustment with Growth: Does the Package Fit
Together? 245
6.1 Comparability and Comprehensiveness 245
6.2 Did Packages Mobilise New Money? 256
6.3 Poor Synchronisation, Delay and Transaction Costs 268
6.4 Conclusion: No Winners from the Overall Package 271
7 The 1986--90 Initiatives: A Break with the Past 273
7.1 Sub-Saharan Government Initiatives 273
7.2 Reforms in Economic Policy Talks 275
7.3 Paris Club Reforms and Cancellations 286
7.4 New Multilateral and Bilateral Aid 296
7.5 Commercial Debt: Reduction And Reform 301
7.6 Conclusion: Beginning to Win 314
8 Winners AU: Negotiating Finance for Development 320
8.1 Answering the Questions 320
8.2 Why More Reform? 324
8.3 A Proposal for Negotiating Finance for Development 326
8.4 Prospects for Further Reform 354
Glossary 360
Bibliography 366
Index 378
List of Maps, Tables and
Figures
Map 1 The Peters Projection of Africa xiv
Tables
1.1 Sub-Saharan Debt Agreements, 1980--9 7
1.2 Estimates of Sub-Saharan Debt and Debt Service, 1989 9
1.3 Sub-Saharan Debt Talks, 1980--9 16
1.4 Debt Indicators for Individual Sub-Saharan Countries,
1989 17
2.1 Sub-Saharan Compensatory Financing Facility Loans 54
2.2 Sub-Saharan High-Conditionality IMF Programmes
1980--7 56
2.3 Type, Duration, Size of IMF High-Conditionality
Loans 58
2.4 Net Flows and Transfers to IMF 59
2.5 Juggling with the Adjustment Gap 64
2.6 Conditions Causing Breakdowns and Waivers 68
2.7 Sub-Saharan Bridging Loans 90
3.1 Sub-Saharan Paris Club Rescheduling Participants 106
3.2 Coverage of Paris Club Agreements 120
3.3 Terms and Conditions of Paris Club Agreements 124
3.4 Nigeria 1983-4 Paris Club Negotiations 129
3.5 Nigeria 1986-7 Paris Club Negotiations 130
3.6 Zambia 1983 Paris Club Negotiations 132
3.7 Zambia 1984 Paris Club Negotiations 132
3.8 Zambia 1986 Paris Club Negotiations 132
3.9 Paris Club 1980--7 Bilateral Agreement Interest Rates 136
3.10 Zambia's 1986-7 Bilateral Agreements 138
4.1 Nigeria 1986-7 Steering Committee 157
4.2 Zambia 1983-7 Steering Committee 158
4.3 London Club Steering Committees 164
4.4 Coverage of London Club Agreements 178
4.5 London Club Rescheduling Terms, 1980--9 182
vii
Vlll List of Maps, Tables and Figures
4.6 London Club New Money, 1980-9 187
4.7 Nigeria 1986-7 London Club Talks 190
4.8 Zambia 1983-4 London Club Talks 192
4.9 Zambia 1986 London Club Talks 194
4.10 Progress in Accepting Nigeria's 1986 London Club
Draft Agreement 200
5.1 Original and Rescheduled Terms of Nimrod
Refinancing 215
5.2 Nigeria 1984 Uninsured Arrears Negotiations 222
5.3 Zambia 1986 Uninsured Arrears Negotiations 224
5.4 Nigeria 1984-7 U ninsured Arrears Reconciliation and
Promissory Note Issuance 226
5.5 Nigeria 1987 Uninsured Arrears Negotiations 228
5.6 Results of Multilateral Clubs 231
6.1 Comparability of Rescheduling Terms and Coverage
between London Club and Paris Club Agreements 246
6.2 Zambia's 'Other Commercial' Debt (end-1986) 251
6.3 Zambia's IMF Debt Conditions, 1986-7 254
7.1 IMF Commitments and Disbursements SAF and
ESAF Loans (1986-9) and Standbys (1988-9) 277
7.2 Paris Club 'Toronto' Options Chosen by Governments 289
7.3 Terms and Coverage of Paris Club Agreements, 1988-9 292
7.4 ODA Debt Cancellations for Sub-Saharan Africa 295
7.5 SPA Aid Pledges and Disbursements, 1988-90 297
7.6 Commercial Bank Provisioning for SSA Debt (June
1990) 304
Appendix Technical Assistance on Debt, 1980-8 358
Figures
1.1 Debt to GDP Ratios for Developing Country Groups 2
1.2 Debt to Export Ratios for Developing Country Groups 2
1.3 Debt Service to Export Ratios for Developing Country
Groups 3
1.4 Sub-Saharan Debt and Composition, 1980-9 11
1.5 Sub-Saharan Debt Service and Composition, 1980-9 11
Acknowledgements
This book is based on my PhD thesis at the London School of
Economics. My greatest debts are to James Mayall, for tireless work
as my supervisor in the final stages, to the UK Economic and Social
Research Council, for funding my PhD, and to Tony Killick, for
advice and encouragement in producing the book. I am also grateful
to Gerald Helleiner and Percy Mistry for inspiring comments, to
Susan Strange for earlier supervision, and to Stephany Griffith
Jones, Reg Green, and Roger Tooze for earlier suggestions and
encouragement.
The book would have been impossible without the help of 350
people who allowed me to interview them non-attributably, and to
look at personal papers or those of their institutions. Many also
commented on earlier versions. To protect their anonymity, I can
ci te only the journalists: thanks to Dick Hall, all at the African
Economic Digest (especially Richard Synge), Patrick Smith, and
Patti Waldmeir.
Fellow students - particularly Mahvash Alerassool, Barbara
Odegaard, Rajmah Hussain, Roddy Calderon, Sola Akinrinade,
Sean Hagan, Kurt Barling and Elizabeth Stewart - discussed and
helped.
The people who helped me in Africa are too numerous to mention.
For hospitality, friendship and inspiration, thanks to: Ashikiwe; all
at the Commonwealth Y outh Centre; Gay; Geoffrey Mazimba; Tina
West; Monday; Tim; and the women of the ZCTU Seminar. In
Washington, Jake and Brad, Aysel, Komola, Heidi, Robert and
Linda, Mark Lediard and Steven Haas offered invaluable kindness.
The inspiration sustaining the research came from reading the
Brandt repo ts in 1984, at Oxford, where Philip Waller and Tony
Kirk-Greene convinced me that I sometimes had something to say.
Finally, tanks to Tim Shaw for showing such faith in me, Clare
Wace for he efficiency and kindness, Patsy de Souza for long hours
typing table , and Elizabeth Black and Keith Povey for assiduous
and meticul us copy-editing.
MATTHEW MARTIN
ix
