Organized every two years, this interactive conference brings together representatives from Governments, international organizations, the private financial and legal sector, academia and civil society to examine some of the most pertinent issues in debt management and debt policy today. It provides an opportunity for debt managers and policymakers around the world linked through UNCTAD's Debt Management-DMFAS Programme to interact and share experiences. This year's agenda covers a variety of topical issues:
- What is odious debt and how does it relate to national and international law?
- What is the future of concessional lending and the conditions that come with these debts?
- Is an independent debt settlement body possible and would it have a chance of being effective?
- Are "vulture funds" normal?
- Is additional debt relief for HIPC countries needed? And what about non-HIPC countries - any relief in sight for them?
- How safe is it to borrow?
- How may information on contingent liabilities be gathered and what are the relevant risk indicators?
- How should a country best enter capital markets? Strategies and country case studies.
- Odious debt
There is a wide disagreement on what "odious" debt really is. The United States first introduced the term "odious" debt as a reason for not honouring the Spanish claims on Cuba in connection with the Paris peace treaty of 1898. The debt, said the Americans, had benefited the Spanish colonizers rather than Cuba. They did not, however, provide a formal definition of the term. A range of proposed definitions has been put forward since Alexander Sack made a first attempt in 1927. In the process, the term "illegitimate" debt has been introduced. The question is, therefore, what is "odious" debt and how does it relate to national and international law?
- Concessional lending - practice of the past?
Concessional lending has not brought developing countries out of the debt trap. Some will argue that this lending has brought countries into an additional trap, the "trap of conditionality", where they no longer have the freedom to act and transact as they feel appropriate. Several countries, particularly in Asia and Latin America, have reacted by building up foreign currency reserves and/or repaying the multilateral lenders. Therefore, what is the future of concessional lending and the conditions that come with these debts?
- Orderly debt settlements
This panel will explore the feasibility of alternative but formalized debt settlement procedures (other than the Paris Club and the failed Sovereign Debt Restructuring Mechanism). Several alternatives have been proposed by various academics, some of whom will present their views. In the context of alternative debt settlements, it is also pertinent to consider the role of the national supreme audit office, particularly because any type of settlement will potentially involve debts of an odious character. Thus, is there room for an independent debt settlement body and would it have a chance of being effective?
- "Vulture funds"
These investment funds, which buy sovereign debt at a discount and then sue the debtor Government for the whole amount, normally with interest and penalties added, cost the debtor countries large amounts of time and legal expenses. Nevertheless, the practice is not illegal, unless bribes or other irregularities are involved. The creditor has been willing to sell, so the funds generally win their cases. Therefore, are these simply normal business transactions that one has to live with or should the debtor be provided some form of protection?
- The case for further relief
What has been achieved by relief initiatives so far? As the HIPC initiative is slowly coming to an end, and more and more countries receive much-needed relief, some questions still remain. These include: (a) Are all countries that have received relief now sustainable? (b) If not, is further relief the solution? (c) Has the coverage of countries been wide enough? (d) Additional countries have, technically speaking, become HIPCs during the implementation process - what to do with them?
- Restructuring of sovereign debt
What might life after HIPC look like? Developing countries will surely keep on borrowing, but from whom should they now borrow? For what purpose and what should be the conditionalities, if any? How much risk do new lenders pose and could this risk lead to a future series of defaults?
- Contingent liabilities - the next debt crisis?
Most developing countries carry a portfolio of explicit contingent liabilities through guarantees and on-lending to the private sector. These liabilities can quite easily be monitored and the risk involved can be assessed. Implicit contingent liabilities are a much greater problem, since they do not arise from a legal or contractual source, but are recognized after a condition or event is realized. For instance, the central bank may consider it a liability to ensure systemic solvency of the banking sector, or the central Government may consider it a liability to cover the obligations of subnational Governments. How may information on contingent liabilities be gathered and what are the relevant risk indicators?
- Formulation of strategies for entering domestic and international capital markets
As foreign financing of development becomes more restricted, developing countries turn to the domestic (and some also to the international) securities market for funding. Before they do so, it is important that a sound strategy be in place that aims at minimizing the cost at an acceptable risk. What best practices can be cited for entering capital markets, building confidence and attracting longer-term funding?
- The use of capital market financing - country case studies
Debt managers from the countries themselves have much to share from their experiences with capital market financing, such as (a) how they develop the markets, (b) how they undertake risk management, (c) how they target the market by using retail bonds and (d) how they manage to extend the duration of their instruments.
|
