THE IMPACT OF COUNTRY RISK ON CROSS-BORDER FINANCING AND NATIONAL DEVELOPMENT
THE IMPACT OF COUNTRY RISK ON CROSS-BORDER FINANCING AND NATIONAL DEVELOPMENT
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Date
2014-03-10
Authors
KOLA, TAIWO
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Abstract
Most borrower countries have had to reschedule their debts to stretch the
repayment farther or incorporate more of their total debt in the restructuring
agreement through a Multi-Year-Restructuring-Agreement in order to obtain a
better debt structure. Grace and repayment periods were prolonged while
spreads were gradually reduced. Inspite of the good growth in the economic
environment of the OECD countries between 1985-1987 with most commodity
prices and interest rates declining thereby offering a generally better debt
profile and positive economic environment, no country which had had to
reschedule its debt reached credit worthiness and hence could not obtain
funds in the international financial markets. In essence, the different
adjustment programmes adopted by the major debtor nations helped to avert
insolvencies but failed to lead the different nations back to credit worthiness.
Indeed, as at 1987, the Third World states owed over $ 1 trillion in external
debt.
A wind of change has therefore been witnessed since the late 80's due to a
feeling of frustration among the major borrowing countries because they
cannot see any opportunity of breaking out of the vicious cycle in which they
have found themselves. The wind of change include making unilateral
decisions such as neglecting their loan repayment dates without prior notice,
limiting the amount of money available to service the debt or declaring a
moratorium on debt payments; requesting for debt relief e-fc.
Different new initiatives have so far been launched such as the Phillipine
Investment Note (PIN) in 1987, Exit Bonds by Argentina in 1987 and Debt
Conversion Programmes. While the first two are yet to be accepted, the Debt
Conversion Programme has had a positive impact in the area of alleviating the
debt problems.
Inspite of this trend, international trade is continuous and the need to finance
it is non-negotiable even if the nations country risks do not look very
attractive.
Description
A RESEARCH PROJECT SUBMITTED IN PARTIAL FULFILMENT OF THE
REQUIREMENTS FOR THE DEGREE OF MASTERS IN BUSINESS
ADMINISTRATION (MBA) IN AHMADU BELLO UNIVERSITY, 2ARIA
1994/95 SESSION
Keywords
IMPACT,, COUNTRY,, CROSS-BORDER,, FINANCING,, NATIONAL DEVELOPMENT