The issues paper prepared by Financing for Development Office at the United Nations in preparation for the multi-stakeholder consultations on sovereign debt for sustained development states that ‘The expectation is that stake holders will want to focus their discussions on practical and realizable policies and processes for managing external sovereign debt.’ If these discussions are to have any lasting value, however, they require a dual focus. Creditor-debtor relations do not exist in a vacuum, but are a feature of a world economy that has facilitated and frequently encouraged excessive accumulation of liabilities by middle income countries, and this situation cannot remedied simply by examining measures for resolving or averting recurrent debt crises within the present economic framework. Therefore, while attention must be directed towards finding a short-term solution to the immediate problems of severely debt-distressed economies, through such means as the independent arbitration process described below, it is also critical that consideration be given to broader long-term proposals for a more fundamental reform of the current financial system, in order that the requirement for developing country borrowing (and especially the need to contract unproductive defensive loans) may be reduced in the future without compromising human development...
Susanna Mitchell
Jubilee Research @ nef
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