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In the 1970s, United States commercial banks became instruments of foreign economic

policy by successfully recycling billions of petrodollars to Third World borrowers. In 1980’s the

United States economic policy found itself unwilling hostage to the interests of the bank. Also,

the United States government needs to reclaim control of capital flowing outward, but it lacks

financial resources to do so. This lack of resources of the Brady Plan is one of the seen

limitations to the plan. Currently commitments to the plan include $24 billion combined from the

IMF and World Bank and $6.5 billion in the new export financing from Japan. A total of $30.5

billion dollars. These resources are expected to underwrite relief on the debt of the 17 HICs

(Highly Indebted Countries), a total bill at the end of $ 528.6 billion. A larger group of

borrowers, such as the 39 countries proposed by the United States Treasury, would diminish the

significance of these resources further.

Another limitation of Brady Plan, is the lack of “carrots and sticks” to induce

participation or penalize non-participation of creditors and debtors. Despite the criticisms of the

Brady Plan, it must be viewed as a dramatic shift in the United States debt strategy. The

immediate impact of the Brady Plan was to ease mounting tensions between debtors and

creditors. It also may give the debtors additional breathing room in which to undertake economic

reform, and finally it recognizes that from debtors’ standpoint, time is running out.

THE AFRICAN ALTERNATIVE

In order for the African continent to get rid of its economic problems- the Africans

themselves must start thinking of long term development programs and should be human

centered. The programs must be developed through a process of democratization. That there

must be a monitoring process established and that the programs must be periodically adjusted

when the monitoring shows that the objectives are not being achieved. Africa must move beyond

the adjustment age and formulate policy in the context of longer-term development goals. The

problem of Africa will not be solved unless it is seen as an indigenous; that the diversity of

Africa situations cannot be addressed through the African standard formulae for all of them; that

the crisis overwhelming Africa must be seen first and foremost as a human one, and not merely

in terms of macro-economic disequilibrium; that developmental concerns such as the elevation of

abysmal levels of health, nutrition, education and productivity cannot be put on hold while

resources are consumed by the need to correct economic balances; and that it is difficult to deny

that the policies, that both African and International, of the 1980s have been overwhelming

inadequate to the task.

The orthodox adjustments programs have failed in most cases because they do not tackle

the fundamental structural distortions plaguing Africa’s’ political economy. The continent’s

needs go far beyond adjustment: it is need of transformation.

“Africa must take charge of its own future” The African governments must take blame

for its current ills. It derives the absence of democracy and accountability in many countries as a

major obstacle to economic growth, misguided domestic policies and Wasteful expenditures, and

the growing defense budgets in countries threatened by no external forces.

There should be an emphasis on pragmatic rather than ideological solutions. Subsides to

Africa could pay an important role if applied to productive activities rather than consumption.

The most critical problem facing Africa is its inability to feed at least a fifth of its people. If we

want to transform food production, therefore, some countries need to ensure a minimum price for

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In the 1970s, United States commercial banks became instruments of foreign economic policy by successfully recycling billions of petrodollars to Third World borrowers. In 1980’s the United States economic policy found itself unwilling hostage to the interests of the bank. Also, the United States government needs to reclaim control of capital flowing outward, but it lacks financial resources to do so. This lack of resources of the Brady Plan is one of the seen limitations to the plan. Currently commitments to the plan include $24 billion combined from the IMF and World Bank and $6.5 billion in the new export financing from Japan. A total of $30.5 billion dollars. These resources are expected to underwrite relief on the debt of the 17 HICs (Highly Indebted Countries), a total bill at the end of $ 528.6 billion. A larger group of borrowers, such as the 39 countries proposed by the United States Treasury, would diminish the significance of these resources further. Another limitation of Brady Plan, is the lack of “carrots and sticks” to induce participation or penalize non-participation of creditors and debtors. Despite the criticisms of the Brady Plan, it must be viewed as a dramatic shift in the United States debt strategy. The immediate impact of the Brady Plan was to ease mounting tensions between debtors and creditors. It also may give the debtors additional breathing room in which to undertake economic reform, and finally it recognizes that from debtors’ standpoint, ...
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