The portion of the assessment due for plan debt service, or assessed plan debt service , would be 10 per cent of 52 million, or 5.2 million.

Furthermore, the debt owed by HIPCs to other multilateral banks is not covered by the plan.

Another important step forward was the finalization of the debt relief plan for the Heavily Indebted Poor Countries (HIPC).

The new plan relies on a questionable mix of dubious financial engineering gimmicks and vague promises of modest Asian funding. Even the best part of the plan, the proposed (but not really agreed) 50 haircut for private sector holders of Greek sovereign debt, is not sufficient to stabilize that country s profound debt and growth problems.

Assuming the contribution was made early in the calendar year, a Member State with a 10 per cent regular budget assessment would have 250 per cent of the assessed plan debt service amount retained for plan debt service by the trustee, which in this example would amount to 13 million (250 per cent of 5.2 million 13 million).

MUNICH In blatant violation of the Maastricht Treaty, the European Commission has come forward with one bailout plan after another for Europe s distressed economies. Now it wants to socialize not only government debt by introducing Eurobonds, but also banking debt by proclaiming a banking union.

In 1919, Keynes produced a grand plan for comprehensive debt cancellation, plus a new bond issue, guaranteed by the Allied powers, whose proceeds would go to victors and vanquished alike. The Americans, who would have had to provide most of the money, vetoed the plan.

Debt sustainability and debt relief

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.

Debt

Debt

Such contracts should also include collective action clauses, which make it impossible for vulture funds to hold up debt restructuring. When a sufficient proportion of creditors agree to a restructuring plan (in the case of Argentina, the holders of more than 90 of the country s debt did), the others can be forced to go along.

Although US federal debt is projected to rise at an unsustainable rate in the long term, the right solution is not fiscal belt tightening now, but rather a credible plan to stabilize the debt GDP ratio gradually as the economy recovers. Indeed, as Fed Chairman Ben Bernanke recently observed, preventing a severe fiscal contraction in 2013 will boost growth, reduce the near term deficit, and help to solve the long term debt problem.

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

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.

We welcome the recent G 8 Africa Action Plan, which promises debt relief, increased aid flows, a commitment to improving global market access for African exports, and an agreement to provide medical assistance to the continent.

External debt

Debt relief

External debt

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

Germany would do well to remember that it has benefited from debt write downs three times in its history. The Dawes Plan of 1924 sought to stagger Germany s reparations payments for World War I. The Young Plan of 1929 reduced the sum that Germany owed in reparations and gave the country much more time to pay.

When Latin American debt was restructured in the 1980 s under the Brady Plan, these sweeteners were provided by the United States Treasury. This time around, the International Monetary Fund and the German government should fill that role.

(d) Debt burden

Restructuring Debt Restructuring

Europe s Debt Wish

China s Green Debt

Debt and Democracy

Does Debt Matter?

The Debt Delusion

Debt Without Drowning

Other debt renegotiations

Haiti External debt

External public debt

So plan B, always a plan B.

Noting with concern the continuing debt and debt servicing problems of heavily indebted developing countries as constituting an element that adversely affects their development efforts and economic growth, and stressing the importance of alleviating once and for all, where applicable, their onerous debt and debt service burden with the aim of attaining a sustainable level of debt and debt service,

The Obama policy would thus lead to ever higher deficits and debt ratios well over 100 of GDP, a level that numerous studies imply would reduce US economic growth by one third or more and might induce a sovereign debt crisis. Some observers suggest that Obama s unspoken plan is ever growing entitlements eventually paid for by a European style value added tax.

SANTIAGO European leaders, faced with the reality of an insolvent Greece, are reportedly now considering a Plan B that would involve reducing the burden of its future debt payments. This is a welcome contrast to the options considered so far, all of which involved under different guises foisting more debt onto a country that has too much of it already.

Debt reduction, either through stock of debt reduction or debt service reduction based on a concessional rescheduling, will continue to be considered only in exceptional cases.

Emphasizing the important role that private sector creditors play in debt relief and debt sustainability,

Africa needs debt cancellation, as no growth can take place with a heavy debt burden.

Agreement by the G 8 to debt relief is a major event, but we should not be fooled by the seeming magnanimity of the gesture much of the debt would not have been repaid in any case. More debt relief encompassing more countries and more debt (including bilateral debt) is needed.

In addition to estimating financing gaps and identifying the sources of financing (including different scenarios of debt rescheduling), DSA includes an analysis of debt dynamics to determine the stability of debt to GDP or debt to government revenue ratios.

The objective is to tailor debt restructuring to the financial needs of the country concerned and to ensure debt sustainability and an exit from Paris Club debt reschedulings.

Unlike other Latin American, Caribbean and Central American countries, Guatemala's external debt situation is stable, with normal debt servicing loads and external debt indicators in the moderate range.

This sharp devaluation increased further the cost of debt servicing and the debt to GDP ratio.