The Commodities Problem and the International Monetary System

There are various dimensions to the commodities problem as seen by LDCs. The first of these relates to instability in export and import prices; the second relates to instability in export earnings and import expenditures and therefore the balance of payments; and the third relates to changes in the terms of trade, in particular the supposed secular decline in the price of primary products relative to the price of manufactures. In a number of ways the international monetary system may help in providing solutions to, or at least palliatives for, certain aspects of these problems. As currently constituted, the IMF can help through the CFF, which is specifically concerned with the financing of export shortfalls; the BSFF, which is designed to assist countries with the balance-of-payments implications of making contributions to international buffer-stock schemes; and the EFF, which provides longer-term assistance for dealing with those balance-of-payments problems of a largely structural variety. In addition, the OF, during its short lifetime, provided financial help for dealing with the balance-of-payments repercussions of the sudden rise in the price of oil imports; and, outside the IMF, the Stabex scheme operated by the European Economic Community provides some financial compensation to LDCs for export-commodity shortfalls.