Monetary Reform
Apart from the two foregoing areas, monetary reform is another issue in which developing countries have all along asked for an equal voice. There has been little or no recognition of the need for developing countries to have a greater say in the management of the monetary system. Developing countries have been continuously asking for the establishment of a "link" between the creation of new international reserve assets and development assistance, but without much success so far. It has been estimated that less than four per cent of the additional liquidity created in the past two decades has accrued to the developing countries which account for seventy per cent of the world's population.
We have, therefore, to look beyond the establishment of new forms of international liquidity, and into aspects such as a fairer distribution of the burden of the adjustment process, an early return to a system of stable and adjustable exchange rates, the replacement of gold by the special drawing rights (SDR) as the prime reserve asset, the validity of the definition for developing countries of short-term resources, and so forth.
In the field of finance, a problem which is of overwhelming importance is that of debt, which has developed into enormous proportions in recent times. Some attempts have been made to study the problem, but the slow movement in this area betrays a lack of awareness of the immediate problems faced by debtor countries.
While speaking in this forum at the sixth special session, we said that the developing countries needed additional liquidity to cope with their present situation and to adjust their economies to the changed economic environment. We said that devices contrived to meet the need for additional liquidity should bear in mind the need to avoid transfer of real resources from the developing countries, as the accumulation of short-term liabilities could add to their burden without mitigating their difficulties. It has been necessary, however, for many countries, including mine, to borrow heavily on relatively hard terms, even for consumption, not to speak of investment, in the absence of concessional financial transfers, thus pre-empting for debt servicing most of the aid which is received now and may be received in the future. In any programme of development finance, we must avoid net transfers in real terms from the poor to the rich nations. Such programmes should also take into account the targets for net transfers set out in the special programme for the countries most seriously affected by the economic crisis. A vital element of the strategy which we have to formulate must necessarily consist in giving a further thrust to solving the problems of these countries. Plagued by the world-wide inflation, the recession in the West, monetary instability and the sharp rise in the cost of their imports, particularly of food, fuel, fertilizers and manufacturers, their growth has been seriously jeopardized.