Two Approaches to the Debt Problem: A) Adjustment of Loan Agreements (De Lege Lata) B) Strengthening of International Monetary Soft Law (De Lege Ferenda)

Until now the accepted approach to the international debt problem has been to avert possible defaults by rescheduling and restructuring the debts of debtor countries which cannot meet their service payments in due time. In most cases, ¹ rescheduling agreements and new financing packages have been anchored to adjustment programs approved by the IMF. On the one hand, as de Larosière points out, the "external adjustment achieved by the developing countries has been spectacular. From a peak of $ 108 billion in 1981, the non-oil developing countries cut their external current account deficit to under $ 40 billion in 1984." ² On the other hand, this "spectacular external adjustment" has been achieved as the result of austerity programs which, among other things, have pushed the standard of living in some of the developing countries back to the level of 10 or more years ago. ³