FORUM: Economic and Social Council
QUESTION: What are the consequences of the recent external debt crisis in MDCs?
SUBMITTED BY: USA
CO-SUBMITTED BY: Russian Federation, Turkey, Australia, Germany
The ECOSOC,
Devastated by the fatal economic wounds caused by the global financial crisis, the largest
financial collapse the world has suffered since the Great Depression,
Deeply concerned by its adverse impact on economic and social development,
Affirming that the cause of the crisis had been under-regulation and that it had all been manmade,
Affirming that deregulation, privatization, speculation, greed and unsustainable debt were all
strong contributing elements to the crisis,
Affirming that foreign debt is needed to cover two types of gaps in the developing process:
a) The foreign exchange gap, which is the payment that a deficit country faces when it has
reduced its external reserves to a minimum compared with projected import requirements,
b) The investment – saving gap, which is the foreign capital needed to supplement domestic
savings for financing real investment levels;
Alarmed by the unprecedented levels of unemployment, underemployment, poverty,
deindustrialization, and environmental destruction; businesses collapsing, jobs lost, entitlements
unpaid and homes repossessed,
Expressing appreciation to all who participated in the ”Conference on the World Financial and
Economic Crisis and Its Impact on Economic Development”,
Reaffirming one of the purposes of the UN, as set forth in its Charter, “to achieve international
cooperation in solving international problems of an economic, social, cultural, or humanitarian
character” and “to be a centre for harmonizing the actions of nations in the attainment of these
common ends”,
1. Strongly urges the following reforms to be met:
a) Economies, including the financial and trading systems, shall be organized and
managed with the aim, not of accumulating vast wealth for a tiny minority, but of
securing the jobs, incomes, public services and safeguarding the environment for the
vast majority,
b) The procedure shall be strongly regulated with new rules to ensure transparency and
accountability in the global finance reform, and
c) Changes shall be made to improve workers’ rights, to put an end to global poverty,
and to create conditions for fairer international trade;
2. Further requests the creation of a coordinated stimulus and development plans that
maximize the effectiveness of said reforms;
3. Strongly encourages goals to be made in all nations for the creation of new policies
regarding inflation, business trade cycles, new tax reforms;
4. Strongly encourages international collaboration in the completion of said tasks;
5. Further suggests the taxation of international financial transactions as a means of raising
funds for the purpose of achieving above goals and helping poor countries, and deterring
speculative behavior;
6. Supports debt forgiveness;
7. Asks for countries to have the ability to pay off debt without high interest penalties;
8. Urges for nations to be productive while paying off debt, as the national GDP can still rise
even while in debt (if a country owes money, it can be productive and raise GDP even
though the inflation is rising);
9. Supports the alternative option of payment of debt, not through money but natural
resources;
10. Proposes the commencement of a transaction system where that will be used by
consumers in a time of currency devaluation and inflation, where the main commodities
are services (e.g. you cut my hair for me, I walk your dog for two days);
11. Endorses a five step process (PAOBD) that will allow MDC’s to have a form of debt
management once the initial debt is dealt with:
a) Policy function: It allows there to be communication between groups that are
responsible for the nations economic management,
b) Administrative function: Establishes an arrangement to not only monitor but record
all external debt, observing all new debts acquired by domestic agents, and complete
records of all debt,
c) Operational Function: set out to deal with external debt on a case-to-case basis adopts a strategy to deal with debt,
d) Bookkeeping Function: focused on having a detailed record of debt and providing a
payment,
e) Data Function: centers on interpreting the debt data and (pin pointing where there are
options on dealing debt and how external debt will be in the future.