Debt relief provided to countries with debt arrears merely amounts to an accounting exercise.16 ODA in the form of non cash assistance and debt relief17 does not bring additional budget support or foreign exchange transfer.

Another subject we should like to highlight regarding debt relief is that once these announcements of additional reductions are made, rumours arise of reductions in additional cooperation resources.

Additional progress has been made in reducing the unsustainable debt burdens impeding the ability of developing countries to meet the Millennium Goals.

However, it was stressed that further efforts were needed and that debt relief should not come at the expense of additional aid.

In addition, if donor flows have to be sterilized in order to meet monetary policy targets, this may create additional debt servicing costs.

However, it was stressed that debt relief should be widespread, without negative conditionalities and should not come at the expense of additional aid.

I would like to speak about additional resources beyond the contribution of debt cancellation pledged by the Group of Eight, which we welcome.

The value of innovative sources of financing for development had been recognized and agreement had been reached on considering additional measures to ensure long term debt sustainability through increased grant based financing, cancellation of the official multilateral and bilateral debt of Heavily Indebted Poor Countries, and debt relief or restructuring for low income and middle income developing countries with unsustainable debt burdens.

We welcome the declaration by the Group of Eight favouring debt cancellation, time bound commitments for enhanced ODA and the efforts for additional innovative financing.

We welcome the declaration of the Group of Eight favouring debt cancellation, time bound commitments for enhanced official development assistance, and efforts for additional innovative financing.

In the current situation, the US cannot reduce the real value of its government debt significantly by indulging in a bout of inflation, because the average maturity on existing debt is very short only about four years. And the projected fiscal deficits imply that the additional debt that will be issued during the next decade will be as large as the total stock of debt today.

In 2003 NPV terms, the outstanding debt stock of the 27 countries was expected to fall from about 80 billion to 26 billion after the delivery of traditional debt relief by bilateral creditors, assistance under the HIPC initiative and additional bilateral forgiveness.

In this respect, the G 8 has recently agreed to provide additional resources in order to cover the cost of full cancellation of the HIPC multilateral debt.

Additional debt cancellation should be achieved without reducing the resources available to other developing countries, and without jeopardizing the long term financial viability of international financial institutions.

Debt relief initiatives should be additional to ODA resources for development purposes and should be all encompassing, so that all heavily indebted developing countries can benefit appropriately.

The 40 billion a year of higher economic activity would, however, generate roughly 10 billion a year in additional tax revenue. Using some of it to pay the real interest on the debt and saving the rest would mean that when the bill comes due, the tax financed reserves generated by the healthier economy would be more than enough to pay off the additional national debt.

It has no economic justification. In the long run, additional targeted spending cuts will be necessary as part of a balanced package to stabilize the debt GDP ratio.

There was a broad consensus that additional efforts were needed to further reduce the unsustainable debt burdens of many developing counties, in particular of the least developed countries.

Without sound economic fundamentals and efforts to seek additional earnings, developing countries could easily relapse into the vicious circle of poverty, debt, and borrowing once aid dries up.

But hints of new fiscal imprudence or of backsliding on long term debt consolidation and reduction can drive up borrowing costs dramatically. In these circumstances, the additional costs of debt service easily outweigh any gains that might come from some measure of fiscal relaxation.

Any approach to the issue must continue to explore the problem of our countries' external debt, linking the important concept of debt sustainability not only to the attainment of the Millennium Development Goals (MDGs), but also to the MDGs plus , or additional millennium development goals.

Debt sustainability and debt relief

Donors as well as recipients must ensure consistency between financing and absorptive capacity. They must also ensure that additional official financing and debt relief will not distort incentives or create moral hazard.

Such new funding needs to be non debt creating, additional to existing development aid flows and channelled directly to recipient countries and, where appropriate, should utilize public private partnerships seeded by donor funding.

Reiterates its conviction that for the heavily indebted poor countries to achieve debt sustainability, long term growth and poverty reduction goals, the debt relief under the Initiative will not be sufficient and that additional resource transfers in the form of grants and concessional loans, as well as removal of trade barriers and better prices for their exports, would be required to ensure sustainability and permanent exit from debt overhang

Most economists failed to foresee the economic dynamics that actually led to the crisis, because they failed to pay enough attention to the rapid increase in US total debt. Instead, they focused exclusively on US foreign debt, ignoring household debt (mortgage and consumer debt), public debt, business debt, and financial debt.

8. Urges donors to ensure that their commitments to the Multilateral Debt Relief Initiative and the Heavily Indebted Poor Countries Initiative be additional to existing aid flows, and underlines that full compensation by donors on the basis of fair burden sharing for the Multilateral Debt Relief Initiative costs of relevant financial institutions is essential

These two structural changes may not be sufficient to provide the eurozone countries in need of rescue an escape route from their predicament. Additional measures, such as haircuts for holders of sovereign debt, may be needed.

The US can do a lot, in part because of the dollar s status as the main international reserve currency. Low interest rates mean that the additional debt burdens that public borrowing will create can remain manageable.

In a globalized world, partnerships were clearly crucial, and additional resources had to be secured through external debt relief, an improved global trading system, increased ODA and both foreign direct investment and mobilization of domestic resources.

Debt

Debt

In addition to this increase in the real cost of debt service, deflation would mean higher loan to value ratios for homeowners, leading to increased mortgage defaults, especially in the US. A lower price level would also increase the real value of business debt, weakening balance sheets and thus making it harder for companies to get additional credit.

French officials apparently don t recognize the importance of the fact that Britain is outside the eurozone, and therefore has its own currency, which means that there is no risk that Britain will default on its debt. When interest and principal on British government debt come due, the British government can always create additional pounds to meet those obligations.

Options for lower debt burdens on Governments of heavily indebted developing countries include debt cancellation and debt swaps for sustainable development.

Despite notable progress in the implementation of the HIPC Initiative, there is an increasing recognition that the HIPCs are falling short of their Millennium Development Goals and will need substantial additional development assistance, including full debt cancellation.

To address the debt burden problem, many African countries at first resorted to repeated debt rescheduling which focused on debt service flows, resulting in steadily increasing debt stocks and related service payments.

External debt

Debt relief

External debt

We consider it important to reaffirm all the outcomes of the United Nations conferences, which form part of the agreed international development framework of which comprehensive debt relief and completion of the Doha round are key additional elements.

Debt relief, debt swaps or debt cancellation could offer important means for mobilizing resources for accelerating progress towards the water and sanitation goals.

To dampen the additional inflationary pressures implied by a weaker rupee, more aggressive fiscal retrenchment is needed. Even so, a depreciated rupee will increase the burden of repaying foreign debt, and deepen the woes of domestic companies and banks.

The additional resource requirements were mainly with respect to the military and police personnel, the additional requirements for which resulted from the phased deployment of 750 additional infantry personnel, 50 additional staff officers, 150 additional civilian police and 1 additional formed police unit of 125 police personnel.

(d) Debt burden