The public service of Papua New Guinea: The first independence decade, 1975–1985 edited by O. P. Dwivedi and Nelson E. Paulius administrative college of Papua New Guinea, 1986 372 pp.
| Published date | 01 October 1987 |
| Date | 01 October 1987 |
| Author | Will French |
| DOI | http://doi.org/10.1002/pad.4230070414 |
PUBLIC ADMINISTRATION AND DEVELOPMENT, Vol.
7, 403-418 (1987)
Book
Reviews
EXTERNAL DEBT MANAGEMENT
Edited
by
Hassanali
Mehran
International Monetary Fund, Washington DC,
1985,
322
pp.
This volume contains a series
of
papers presented at a seminar on external debt management
in
Washington under the auspices
of
the IMF Institute and the Central Banking Depart-
ment
of
the International Monetary Fund in December
1985.
It includes a section
of
additional material on debt management in selected countries represented at the seminar.
The seminar provided a forum for national officials with responsibility for debt manage-
ment in
28
member countries of the Fund and the World Bank. Particular emphasis was
laid on the implications
of
these issues for policy-making and for the Fund’s role in making
adjustment
in
changed and changing circimstances. The issues addressed were essentially
those of the indebted developing countries. However it was recognized that their scale and
nature differ appreciably not only between the two principal problem areas-sub-Saharan
Africa and Latin America-but also from country to country within each area. Nor were
the participants drawn exclusively from the main problem areas, witness the presence
of
officials from Australia, Denmark, Finland, New Zealand, Spain and Sweden.
The volume is divided into three sections: a brief introduction setting the scene, lead
papers mainly by officials of the Fund and Bank and guest lecturers, and finally the
22
notes
on
external debt management
in
the
22
selected countries. The essential content is
in
the second section. This is introduced by the Managing Director
of
the Fund and contains
papers on the strategic roles
of
the Fund and Bank; Fiscal Management; the institutional
structure and techniques of external debt management; official and commercial bank debt
rescheduling; accounting, statistical and information issues; and a sovereign borrower’s
perspective of negotiating loans with trans-national banks. All the papers are authoritative,
well written and remarkably readable given the somewhat forbidding nature of the subject.
They are essential reading for all concerned with the problems
of
external indebtedness,
particularly
in
developing countries.
Certain points stand out. Effective debt management is an aspect
of
good general
management. The objectives must be right, the plans must be viable and efficiently
implemented, and the results must be properly evaluated. In short applied common sense
is needed, and it has to be based
on
adequate information about what is happening.
Evidently even the basic accounting material is woefully lacking in more than one country.
General economic and fiscal policies must be
in
harmony with the objectives
of
the
borrowing process. Too often they appear to conflict. Debt should only be raised to finance
clearly defined projects
or
policies designed to produce the wherewithal to service it.
Above all debt should not be incurred to perpetuate fiscal deficits as an easy alternative
to unpalatable financial decisions.
Too
often this has happened, especially in the
1970’s
when money was relatively plentiful.
There is no magic formula for ensuring that lenders and borrowers will behave sensibly-
nor
to
resolve debt crises. However, problems will be eased
or
avoided if countries adhere
to a few ground rules quoted
in
the introductory section as being consistent with a
sustainable external debt position, viz.
(1)
external borrowing to be used for productive investment, with returns that at least
match the cost of borrowing, taking account,
inter
alia,
of the absorptive capacity of
the borrower;
(2)
aggregate domestic savings should at some time exceed aggregate domestic invest-
ment by a margin sufficiently large to meet at least the interest charges
of
previously
incurred debt;
0
1987
by John Wiley
&
Sons, Ltd.
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