Declaration and action plan for Latin American economic recovery.

The Quito Declaration and Plan of Action were adopted at the Latin American Economic Conference, a meeting of regional Heads of State or Government and their personal representatives at quito, Ecuador (9-13 january).

The countries adopted "basic criteria" for renegotiating their external debts, including the following:

* "Export earnings income should not be committed beyond reasonable percentages consistent with the maintenance of adequate levels of internal productive activity";

* Debt service payments should be reduced, and mechanisms should be explored to stabilize the debt servicing of each country in accordance with its payments profile;

* Debt renegotiation "should be accompanied by commercial measures essential to improving the terms of access for exports from Latin America and the Caribbean in world markets and eliminating increasing protectionism by the developed countries";

* The possibility of converting part of the accumulated debt into long-term obligations should be urgently explored;

* A "net, adequate and increasing flow of new public and private financial resources for all the countries of the region" should be an essential component of external debt renegotiations;

* Finance ministers and Central Banks should carry out confidential exchanges of information on terms of debt refinancing and rescheduling.

Convened on the initiative of Ecuador's President Osvaldo Hurtado, the Quito Conference arose from the "Santo Domingo Pledge", adopted at a meeting in the Dominican Republic in August 1983, also initiated by President Hurtado. At that time, Latin American and Caribbean countries agreed to meet "at the highest political level" to prepare a response to the economic emergency affecting their region.

Twenty-six Latin American and Caribbean countries were represented at the Quito Conference by five Heads of Government, three Vice-presidents, five Foreign Ministers and various presidential delegates. Heads of State participating were the Presidents of Colombia (Belisario Betancur), Costa Rica (Luis Alberto Monge), Ecuador (Osvalado Hurtado) and the Dominican Republic (Jorge Salvador Blanco); and the Prime Minister of Jamaica (Edward Seaga). Vice Presidents attending were Carlos rafael Rodriquez of Cuba; Fernando Schwalb of Peru; and Jorge Illueca of Panama--now President of his country, as well as President of the thirty-eighth General Assembly.

Among other participants were theh Foreign Ministers of Argentina (Dante Caputo), Bolivia (Jose Ortiz Mercado), Brazil (Ramiro Saraiva Guerrero), Mexico (Bernando Sepulveda Amor) and Uruguay (Carlos Maesso). Also attending were Ministers of State and personal representatives of the Heads of Government of Barbados, Belize, Chile, El Salvador, Guatemala, Guyana, Haiti, Honduras, Nicaragua, Paraguay, Suriname, Trinidad and Tobago and Venezuela.

In an address to the Conference on 12 january, Jorge E. Illueca (Panama), President of the 38th General Assembly, said that "the Northern countries are branding us as insolvent, as incompetent to solve our domestic problems, as incapable of establishing free-trade or monetarist economic models and as countries seeking to gain access to their markets with cheaper products . . .

We come to Quito to witness a correction of courses, a transformation of systems--in short to promote a substantive change in the styles of Latin American economic and social development".

The Quito Declaration and Plan of Action were prepared with the assistance of the Economic Commission for Latin America (ECLA) and the Latin American Economic System (SELA). The texts were discussed during the technical-level phase of the Conference (9-11 January), then adopted during the ministerial-level phase (12-13 January). Declaration

The 27-point Declaration begins with a reaffirmation of the Latin American countries' "unity in diversity" and a rejection of the "interventionism which has recently manifested itself dramatically" in the region. "We stress the need to find a negotiated solution to the problems of Central America which arise from the economic, social and political conditions prevailing in that area, to which end we lend political support to the Contadora Group", the text states.

What the Declaration terms "the most serious and intense economic and social crisis of this century" originated, it says, "in internal and external factors". The economic policies of some industrialized countries "have brought about the constant deterioration of the terms of trade, diminishing trade, an inordinate increase in interest rates and the sharp contraction of capital flows. The overwhelming burden of our external indebtedness forms part of this picture", the text continues.

Adjustments which cause "prolonged declines in production, employment and living standards are not compatible with the objectives we pursue", according to the Declaration. Nor can regional efforts alone resolve the problem of external debt. The attitude of the Latin American and Caribbean countries in "recognizing and assuming" their obligations calls for an "attitude of shared responsibility" on the part of creditor countries and the international financial and banking institutions.

"We formally call the attention of the leaders of the industrialized countries to the seriousness of the region's economic situation, its high social cost and the need to participate urgently in measures to confront the crisis, directly through their Governments and through the international organizations", the text states.

The Declaration reaffirms the "urgent need" to reform the international monetary and financial system and calls for measures to counter the decline in trade levels, urging in particular that the industrialized countries dismantle existing protectionist barriers and refrain from erecting new ones. Action Plan

Specific proposals for reducing external debt, expanding intraregional trade and improving international economic relations are contained in the Plan of Action. (The Plan includes the "basic criteria" outlined above.)

"Responsibility for the external debt problem must be shared by the debtor and the developed countries, along with the international private banking system and multilateral finance organizations", states the Plan, noting that the Latin American and Caribbean countries have already made "extraordinary adjustments" in their economies to meet their international obligations, despite the high social, political and economic cost involved.

"The adjustment process should operate in the future through an increase in the volume and price of exports and a decrease in real interest rates, and not by additional restrictions of imports vital to the internal economic recovery", according to the Plan of Action.

Technical assistance in renegotiating external debt, when requested by countries, should be provided, the Plan says, by appropriate international organizations, such as ECLA, SELA, the Center for Latin American Monetary Studies (CEMLA), the United Nations Conference on Trade and Development and the United Nations Development Programme.

To improve international economic relations, the Plan suggests reforms in the international monetary and financial system, "to achieve a more balanced world-wide institutional framework", as well as measures in the field of development financing. In that regard, substantial increases in the resources of the International Monetary Fund, Inter-American Development Bank and the World Bank are proposed.

Proposals on trade include a commitment not to increase barriers to intraregional trade, along with measures to increase exchange of goods and services among the Latin American countries, such as the establishment of a regional tariff preference "of such a magnitude that it will divert and create trade currents towards Latin America and the Caribbean".

As a support mechanism for expanding intraregional trade, the Plan recommends expansion of the present systems for reciprocal payments and credits in the region, to improve financial co-operation among the countries.

Other proposals in the Plan aimed at increasing regional self-suffiency concern food, energy and services. The text states that "all Latin American and Caribbean nations should belong to the Committee for Action on Regional Food Security (CASAR) of SELA", and each country is encouraged to formulate national food plans to promote production of basic foodstuffs and improve their distribution and consumption.

Action to intensity energy co-operation includes strengthening the energy planning system as "an instrument to consolidate the economic development of the region". Affirming the "growing importance of the service sector" for economic development, the Plan recommends joint efforts in the transfer of technology and co-operation plans in such areas as transportation, insurance and reinsurance. Statements

Secretary-General javier Perez de Cuellar, in a message delivered at the opening session on 9 January in his behalf by ECLA Executive Secretary Enrique V. Iglesias, said a meeting such as the Latin American Economic Conference would confirm to the rest of the world "the responsible attitudes which the region has adopted in order to cope, by difficult internal adjustments, with its balance-of-payments crisis". The Conference would also "bring into relief the true profile of the Latin American recession", the Secretary-General said.

Recognition of this fact, according to Mr. Perez de Cuellar, "should inspire international co-operation efforts that would be in keeping with the nature and magnitude of this crisis, and would ultimately serve common interests: a Latin America in expansion would automatically constitute a powerful motive force for the expansion of the world economy, a goal in which all the countries of the world have a vital interest."

Although the focus at Quito was on economic issues, Assembly President Jorge E. Illueca (Panama) in his address emphasized the political and social aspects of the current crisis as well. Any regional economic plan of action, to be successful, must contain specific proposals for social improvement in each country, he said.

"People who are malnourished or sick, who lack education, employment, housing and, above all, faith, hope and confidence in the future, will not heed the call to build an integrated and democratic Latin America", he warned. "Nor will they be able to participate conscientiously in the productionh process unless the burdens that this will place on them are balanced by an appreciable improvement in their standard of living."

The external debt of Latin America had passed from being a purely economic matter to one with "political dimensions of the utmost seriousness", according to Mr. Illueca. The time had come, he said, to consider the pressing need for a Latin American reserve system, Latin American financing sources and even the establishment of a Latin America fund operated by and for Latin Americans.

Outside interference in Central America and the Caribbean had internationalized conflicts, which would not be resolved until the region was "free from the meddling of foreign Powers of whatever ideology", he stressed. The countries of Latin America "must forge a political compromise so that we can confront together the national, regional and international repercussions" of the current economic crisis.

Agreement should be reached to co-ordinate the efforts of the Latin American Economic System, Carlcom (the Caribbean Community), the Central American Common Market, ALADI (the Latin American Integration Association), the Andean Pact and other organizations having similiar objectives. On the "road to recovery and effective Latin American Integration", Mr. Illueca emphasized, these organizations "cannot remain as islands in separate oceans, nor can Cuba, Haiti, Panama and the Dominican Republic be kept outside the integration system.