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Fear grips financial expert over trade financing

by Business News Report

International experts have expressed fear in the future of international trade financing as a result of the growing inability of debtor-nations to pay off their debts or reschedule them.
Two officials of the International Monetary Fund who come on vacation to Nigeria speaking unofficially, said that the issue of debt rescheduling through the Paris Club for commercial banks, governments and their official agencies has stalled further credit to debtor-nations particularly as most of the talks are not conclusive.
The officials said that what worries experts is the fact the debt issue is affecting not only Latin America and Africa as some would believe but also the creditor nations whose exports have decline as a result of recent years.
Quoting from records they said that between 1975 ad 1982, there were 28 agreements totalling $12 billion while rescheduling with an overall value of $33 billion took place between 1983 and mid 1986.
According to the officials, Poland tops the list of a $10.3 billion debt rescheduled in around July 1985.

Turkey was placed second on the successful debt rescheduling table having rescheduled $5.5 billion debt. Third on the table is Argentina with $2 billion.
Brazil with an external loan of $108.6 billion as at November 1983 had an arrangement with the Paris Club for about $2 billion.
Financial circles are also worried over the slow pace of negotiation between Nigeria and the Paris Club in reaching agreement on loan rescheduling of only $2 billion out of a loan package of $22.7 billion.
According to the experts, Japan last year replaced the United States as the world’s second best in terms of non-gold reserves holdings between Western Germany.
This new trend experts explained was as a result f the redistribution resulting primarily from Japan favourable balance of trade of 1986.
The US ran up record of about 170 billion dollar trade deficit, 60 billion of which was with Japan. This had created a huge trade deficit between Japan and US.
The Japanese trade surplus according to them has made the Yen to be over valued and is disrupting the Japanese economy.
Japan’s real GNP grew by 2.1 per cent while her reserves increased by 42% last year to 34 billion Special Drawing Right, SDR, the IMF unit of measure or US $42.1 billion as at December 31, 1986. This represents more than 8% of the world totals.

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