Debt distress, no longer just the province of poor countries, is a drag on development programmes as well as on the world economy, United Nations leaders said on Tuesday.
Their observation came as economic experts and representatives of international financial institutions met to discuss practical and equitable mechanisms for restructuring sovereign debt.
“The difference between today’s crisis and other recent crises is that, today, problems related to sovereign debt are not confined to emerging markets or low income countries,” Néstor Osorio, president of the Economic and Social Council (ECOSOC) said at the opening of a special meeting entitled “External debt sustainability and development: Lessons learned from debt crises and ongoing work on sovereign debt restructuring and debt resolution mechanisms.”
“To achieve sustainable development, the international community needs to promote responsible borrowing and lending, along with improved debt management,” Osorio said.
Today’s meeting comes one day after ECOSOC hosted a special high-level forum with the Bretton Woods institutions, the World Trade Organization (WTO) and the U.N. Conference on Trade and Development (UNCTAD) on “Coherence, coordination and cooperation in the context of financing for sustainable development and the post-2015 development agenda.”
Osorio noted that Tuesday’s debate on sovereign debt restructuring has important implications for the financing of sustainable development and the development agenda following the 2015 deadline of the Millennium Development Goals (MDGs) that aim to slash extreme poverty and accompanying ills.
The total external debt of developing countries and countries with economies in transition surpassed $4 trillion by the end of 2010, according to Secretary-General Ban Ki-moon’s 2012 report on external debt sustainability and development, with an estimated 12 per cent increase annually after.
“Countries in debt distress are generally unable to attract necessary financing for sustainable development,” the ECOSOC president noted. He added that countries with debt overhangs often spend a large proportion of public resources on debt servicing, and are unable to allocate public revenue to expenditures necessary for sustainable development.
Also addressing the special meeting, the Assistant Secretary-General of the U.N. Department of Economic and Social Affairs, Shashad Akhtar highlighted the importance of closing the gaps in debt management through restructuring, early response and coordination.
“There is a need for a process through which there is early engagement of debtors and creditors to frankly address unsustainable situations on a timely basis, which would reduce overall uncertainty in affected economies, as well as for a framework for creditor consultation and structures for engagement with debtors,” Akhtar said.
She added that unlike in the 1980s when the main creditors were large commercial banks, today’s bonds are held by a variety of entities and individuals. As a result, one of the issues that needs to be addressed is collective action involving creditors.
Meanwhile, the Secretary-General of the U.N. Conference on Trade and Development (UNCTAD), Supachai Panitchpakdi, cautioned that not all origins of the debt crises are financial and as a result cannot be solved solely with financial means.
“If you go overboard with austerity measures, that might reduce growth without reducing debt,” Panitchpakdi said.
He noted that piecemeal solutions had been put forward in hopes that banking system would resume lending without cleaning up its balance sheets, while countries had waited too long for restructuring efforts to be executed, creating economic uncertainties and hindered growth.
Today’s ECOSOC meeting included a series of presentations from senior officials of the World Bank and International Monetary Fund (IMF) and included a range of roundtable discussions, such as one on the perspective of the private sector on restructuring debt.
The meetings are part of a larger effort to strengthen relations between the UN and international financial institutions such as the World Bank and the IMF.
Last week, Secretary-General Ban Ki-moon co-hosted a series of events on themes linked to the MDGs with World Bank President Jim Yong Kim on the sidelines of the 2013 spring World Bank-IMF meeting.
(UN News)
The key word in this document is “responsible borrowing”. There is a saying, “the only job you get to keep, is the one you created”.
Today China’s economy is moving forward and growing at a rate that puts them in second place in a short time. China has a middle class that is growing. I believe this is due to a vast export and an internal economy. They moved from a government driven economy to one where Chinese are free to buy and sell and start a business, unlike the old days when total control was with the government.
Even Cuba is trying something different. It is encouraging entrepreneurship and Cubans are buying and selling properties and other commodities.
What the Chinese and Cuban politicians realize is that there will always be poor and underprivileged people, no matter which system they utilize. There are still beggars on the streets and people go hungry and are homeless in both countries. This is what communism was suppose stamp out, but if failed.
On the other hand there are beggars and homeless people in every country, including SVG. Politicians don’t see this, or they look the other way. As a matter of fact, there will always be beggars and homeless people, but as long as it’s not the people in power or their families, they don’t give a damn.
To end some of the suffering in SVG, it needs a strong internal economy. The government should help to bring back agriculture and help to protect the farmers. I remember seeing the people who sold fish, going to Vermount to exchange fish for agricultural products. That created a thriving local economy where everybody was happy and no one was hungry.
Today, farming is on the decline because farmers are afraid to lose their animals and products. The farmers need government help to protect their livelihood. Cameras can go a long way to ensure farmers are protected. The agriculture department or the minister should encourage farming cooperatives, where farmers join together to help protect the livelihoods. They could be encourage to setup cameras and take turn monitoring their investments. They can also swap labour to reduce their cost. The legal system must also be updated to ensure justice is done and farmers are compensated for losses.
There are so many little things that can make a difference in the lives of farmers, their family and the entire island. All that’s needed are people with vision. Most politicians are in power for themselves. There should be a system where politicians declare what they own before running for office. It is the only way to ensure they don’t leave office with money that belongs to the people.
I am asking for too much?
I’ll be putting most of these articles on my blog. You will get an invitation to visit soon.
PVP, I agree with most of what you wrote, but you need to rethink this “There is a saying, the only job you get to keep, is the one you created.
In the past perhaps, today no ones job is safe even the one you created. Small business’s are failing everywhere.
Under this Marxist regime, there are more homeless on the streets than ever before. Even when slavery ended in 1838, people were treated better than under this Marxist bunch of turds.