Who, if anyone, will assume responsibility for any national debt?

PRINCETON Any economic slowdown increases debt burdens, whether for households or for states. Today, both are looking for ways to reduce the weight of debt and some would prefer to escape it.

First, debt relief arrangements should seek to avoid imposing any unfair burdens on other developing countries and secondly, resources made available for debt relief should not detract from ODA flows.

The Panel strongly supports the proposal that all debt should be cancelled, in any event for all low income countries.

An ex ante debt restructuring that reduces the size of any new loans and renders the debt sustainable before any reforms are implemented stands a good chance of crowding in investment, stabilizing incomes, and setting the stage for recovery. In sharp contrast, a debt write down like Greece s in 2012, which resulted from a program s failure, only contributes to maintaining the downward spiral.

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.

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

The fact is that Greece had no right to borrow from German or any other European taxpayers at a time when its public debt was unsustainable. Before Greece took any loans, it should have initiated debt restructuring and undergone a partial default on debt owed to its private sector creditors.

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

IMF requested that the Government desist from repaying any debt until the entire quantum of debt is determined and rescheduled and the repayments are prioritized. (See table 7.

One possible solution would be to permit member states to issue debt as eurobonds up to, say, 60 of GDP, and to require them to be individually responsible for any debt exceeding that level. This would give countries with high levels of public debt an incentive to consolidate their public finances.

The ECLAC region's debt to export ratio is higher than that of any other developing region.

(h) To take steps to ensure that resources provided for debt relief do not detract from official development assistance resources intended to be available for developing countries and that the debt relief arrangements seek to avoid imposing any unfair burden on other developing countries

(h) To take steps to ensure that resources provided for debt relief do not detract from official development assistance resources intended to be available for developing countries and that the debt relief arrangements seek to avoid imposing any unfair burden on other developing countries

To believe that any country issuing debt in its own currency is risk free as long as the exchange rate is flexible is astonishingly naive. For one thing, there is still inflation risk, particularly for countries with weak fiscal institutions and heavy debt burdens.

12. Notes that it is important for the International Monetary Fund and the World Bank to continue their efforts to strengthen the transparency and integrity of debt sustainability analysis and to consider any fundamental changes in countries' debt sustainability caused by natural catastrophes, severe terms of trade shocks or conflict when making policy recommendations, including for debt relief, as appropriate

15. Notes that it is important for the International Monetary Fund and the World Bank to continue their efforts to strengthen the transparency and integrity of debt sustainability analysis and to consider any fundamental changes in countries' debt sustainability caused by natural catastrophes, severe terms of trade shocks or conflict when making policy recommendations, including for debt relief, as appropriate

Above all, any realistic strategy for dealing with the eurozone crisis must involve massive write downs (forgiveness) of peripheral countries debt. These countries massive combined bank and government debt the distinction everywhere in Europe has become blurred makes rapid sustained growth a dream.

Our commitment also involves ongoing reconstruction assistance for the areas affected by the disaster and an immediate debt moratorium for any of the countries affected by the crisis that request it.

Until recently, public debt was considered the ultimate safe asset. Indeed, its risk free status was embedded in the European Union regulatory framework, which allows banks to hold large volumes of any eurozone country s public debt without having to put aside any capital to cover potential losses.

With governments around the world (including Germany s) accumulating unprecedented levels of peacetime debt, markets are worrying about sustainability. Some crisis prone countries such as Latvia are already unable to sell any more debt.

A New Deal for Debt Overhangs?

You are liable for the debt.

Need for broader external debt relief

As for the birthplace of the euro crisis, Greece s debt will almost surely have to be restructured. But adequate funding structures for Italy and Spain must be in place before any resolution.

For the most part, poor countries have been paralyzed by debt service payments and rendered unable to do little, if any, development infrastructure construction for the systems needed by their own people.

Blanchard is a pioneer in the economics of public debt. He knows that Greece s debt has not been sustainable at any point during the last five years, and that it is not sustainable now.

But the demonstration effect would be immediate. Once any major country develops a market for GDP linked debt, the concept will be established, making it much easier for other countries to join in.

Debt sustainability indicators for Haiti are mixed.

UNCTAD should continue its work in the area of debt, including the study of the application of debt for equity swaps for development.

Debt sustainability and debt relief

Thus, the Paris Club's Evian approach relies on IMF Debt Sustainability Analysis for determining the terms of debt reschedulings.

Concerned that many developing countries continue to struggle for a durable solution to their serious debt problems, where continuing debt and debt servicing obligations adversely affect their sustainable development,

Indeed, there is a compelling case to be made for Indonesian debt relief in any case, given that much of the debt was incurred in loans to the corrupt Suharto government. Lenders knew, or should have known, that not all of the money was going to help Indonesian development.

Finally, GDP indexed bonds and other tools for dealing sensibly with unsustainable debt could be applied exclusively to member states debt not covered by the program and in line with international best practices for sovereign debt management.

14. Reaffirms that reviews of debt sustainability should also bear in mind the impact of debt relief on progress towards the achievement of the development goals set out in the Millennium Declaration and the fact that debt sustainability analysis at the completion point needs to take into account any change in the global growth prospects or in the terms of trade, especially for commodity export developing countries

By virtually any measure, official Japanese debt is the highest in the world. The total outstanding volume of Japanese Government Bonds (JGBs) is an almost unfathomable 9 trillion, only just below the 10.5 trillion in outstanding debt for the full 17 country eurozone, which has more than triple the population.

Cochrane s heaviest punching is reserved for Krugman s support for President Barack Obama s fiscal stimulus. He invokes the hoary old Ricardian equivalence theorem, revived by the Harvard economist Robert Barro, according to whom debt financed spending can t have any effect, because people, seeing the higher future taxes that must pay off the debt, will simply save more.

Reiterates its view that, in order to find a durable solution to the debt problem and for the consideration of any new debt resolution mechanism, there is a need for a broad political dialogue between creditor and debtor countries and the multilateral financial institutions, within the United Nations system, based on the principle of shared interests and responsibilities

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,

11. Also stresses the need to find a solution for the debt problems of heavily indebted low and middle income developing countries that are not eligible for debt relief under the Heavily Indebted Poor Countries Initiative, and in this regard continues to encourage the exploration of mechanisms to comprehensively address the debt problems of those countries, which may include debt for sustainable development swaps or multicreditor debt swap arrangements, as appropriate

Fifth, debt burdens that cannot be eased by growth, savings, or inflation must be rendered sustainable through orderly debt restructuring, debt reduction, and conversion of debt into equity. This needs to be carried out for insolvent governments, households, and financial institutions alike.

The demand for debt repayment confronts the philosophy of debt forgiveness. In the lender s view, the 17 interest rate that Greece s government now has to pay for its 10 year bonds accurately reflects the lender s risk in buying Greek government debt.

First, funds from different sources of finance are interchangeable to a certain degree deficiency of funds for one component of total debt can be supplemented by surplus funds originally aimed at financing other components. Second, troubles in any single component of total debt will have an impact on all the other components.

(g) To establish effective debt tracking mechanisms in developing countries and strengthen technical assistance for external debt management and debt tracking, including through enhanced cooperation and coordination between organizations providing assistance in this regard