World Bank Document

Figure 10.1 The current account, capital flows, Figure 10.2 Net financing flows to developing
and debt of developing countries, High and countries, High and Low projections for 1990
Low projections for 1990
(billionsof 1980 dollars) 1990 Billionsofdollars
1980 1984 High Low
Components of the 100
current account 0
Net exports of -20 80
goods and services 40
0
Interest on mediumr
and long-term debt 20
* to official sources
* to private sources -60 1980 1984 High Low
-80 * Direct foreign investment 1990
Private nonconcessional lending
Current account 0 _ Official nonconcessional lending
balance, excluding -20 U Official development assistance
net official transfers
-40 Source: World Bank data.
-60i
package supporting stabilization and adjustment,
particularly in low-income sub-Saharan African
Financing of the 15 countries committed to strong adjustment efforts.
current account
The prospects for the next ten years do not
10 exclude the possibility of further debt-servicing
Net official transfers
5 _ _ _
difficulty for many developing countries. The Low
scenarios in this chapter show how it could happen.
The world economy does not need to slump,
0 as it did in 1981-82, for debt problems to recur. If
industrial economies grow at 2.7 percent a year for
Medium- and 60 - the next five years, as in the Low simulation, and
long-term loans
this growth is accompanied by high real interest
40 rates and increased protectionism, several groups
* official sources of developing countries could find themselves
* private sources 20 with heavier debt-servicing burdens at the end of
_ _ _ this decade than they had at the beginning.
The financial outcomes of the Low scenarios are,
of course, just one aspect of a much wider failure.
Stock of clebt 800 Slow economic growth in the industrial countries
600 would increase their unemployment, adding to the
Debt outstanding 4
and disbursed 4
protectionist pressures that would, if conceded to,
hamper growth still further. The attainment of
200 long-term potential growth by industrial econo-
__ __ mies in the next ten years would become more
0 _ _ _ remote. The developing countries would find it
Source: World Bank data,
144
hard to liberalize their economic policies if their
export efforts were frustrated by trade barriers and