MONTEVIDEO, Uruguay — Latin America's major debtor nations Tuesday offered an "emergency proposal" to their major creditors and appealed for reduced interest rates and fresh financing to stimulate new economic growth.
"In the past five years, we have slid backward a decade," the 11 nations said in a new call for assistance from governments, banks and multinational lending agencies in the industrialized world. The proposal paid passing homage to a plan proposed in October by U.S. Treasury Secretary James A. Baker III to ease the debt problem but said it was insufficient.
"Latin America must return to growth. That is the inescapable commitment of its governments to its peoples," the nations said in a statement, titled "Declaration of Montevideo," released here Tuesday night after a two-day meeting of foreign and finance ministers.
'Not Threatening Anyone'
The tone of the meeting was sober and realistic, a far cry from the stance taken by some Latin nationalists who have lobbied for a "debtors' cartel" with which to confront creditors.
"We are not threatening anyone. We are proposing a constructive dialogue," said Argentine Economy Minister Juan Sourrouille.
The proposal calls for a return of interest rates to "historic levels." Although the declaration did not specify what reduction the debtors seek, an earlier working draft of the document mentioned a decline of 3 percentage points by the end of 1986.
"Failure to reduce interest rates neutralizes efforts to refinance debt and accumulates new debt at an unsustainable pace," the statement said.
The debtor nations also called for increased credit from commercial banks to keep pace with international inflation and reiterated longstanding calls for an end to First World protectionism against Latin American exports.
They proposed a 20% increase in developmental lending by international agencies and revised lending criteria by the International Monetary Fund that would favor growth over austerity. The proposal, almost as an afterthought, also contained a veiled threat.
"If the countries are not able to effectively carry out the emergency proposal, they will have to adopt other types of measures to assure limitation of capital transfers and achieve growth targets," the declaration warned.
"Not to do that could produce situations of political and social instability that could undermine the consolidation of democracy in the region."
The 11 nations, whose combined debt is $340 billion, acknowledged the Baker plan to stimulate new growth as a "positive step" but said it was not large enough to reverse the outflow of precious capital from the region. The Baker plan calls for $20 billion in new lending by private banks and $9 billion in additional loans from the World Bank over the next three years to stimulate growth.
"The Baker plan is insufficient to allow debtors to meet obligations to their creditors while at the same time assuring sustained growth," the statement said.
Calling growth "an undelayable requirement," the debtors envision a doubling of regional per capita income by century's end. That will require a reversal of current patterns in which more money goes out of Latin America in debt repayment than comes in as investment to promote growth, the debtor nations said. In 1985, they said, there had been little inflow of funds to most Latin American countries while the negative net transfer of capital out of the region totaled $30 billion.
In the meantime, the declaration said, investment was stagnant and regional exports fetched around $6 billion less than they did in 1983.