part of external debt of countries facing debt-servicing problems was owed to transnational banks. Twenty-five banks with a high degree of transnationality accounted for the mobilization of well over 80 per cent of developing countries' bank loans. As regards past activities, transnational banks had contributed to the reduction of debt or its immediate servicing cost in several ways. Among these were: negotiated interest reductions in the course of restructuring agreements, the rescheduling of principal repayments, the informal acceptance of interest arrears, and participation in various forms of debt conversions at considerable discounts. He noted that such contributions notwithstanding, the claims of commercial banks on 17 major debtor countries (including Hungary and Poland) in 1988 were nearly $60 billion more than in 1982. Their debt service, as a proportion of their exports of goods and services, averaged more than 40 per cent. In consequence, a substantial outflow of resources from those debtor countries to the rest of the world persisted with its inescapable implications for a decline in investment, consumption and expenditure on vital social services, such as health and education. 73. The Brady plan undoubtedly represented a major step forward in the international perception of the debt problem in its explicit recognition of the need to reduce the stock and service of debt owed to transnational banks. It contained a number of elements aimed at encouraging transnational banks to contribute to the process of debt reduction. However, he observed that given the financial resources currently foreseeable to support the implementation of the Brady p~an and the instrumentalities for effecting the reduction envisaged under it, the anticipated impact would be inadequate to meet the debt reduction needs of debtor countries. Moreover, the information available on the agreements so far reached between the debtor countri~s and their creditor banks within the framework 
**Analysis**
The text discusses the debt-servicing problems of developing countries, the role of transnational banks, and the impact of debt on the economy and society. It also mentions the Brady plan, which is a plan to reduce the stock and service of debt owed to transnational banks. The text highlights the need for debt reduction and the challenges in implementing the Brady plan.

**Category**
International trade, Economic development