FfD Forum 2019
Statement to Panel E: “Debt sustainability and systemic issues” on behalf of Civil Society FfD Group (including the Women’s Working Group on FfD)
Delivered by Jurgen Kaiser, Jubilee Germany
18 April 2019
We are discussing the next sovereign debt crisis, as if it were inevitably coming our way. However, it is not. It is already there!
The Global Sovereign Debt Monitor shows that as of end-2018 there are 17 countries already in partial or total default, not counting those HIPCs which have been unable to obtain full debt cancellation from all of their private and non-Paris-Club-official creditors. And numbers are rising.
We see more and more countries borrowing abroad with the sole purpose of re-financing current debt service, without producing any economic growth. This is normally the last stage before an external shock pushes a sovereign over the edge of debt un-sustainability.
Such a situation cannot be resolved without appropriate debt relief – as the IMF rightly pointed out in the case of Greece, for instance.
However rather than bold steps to solve a crisis before it develops into a catastrophe, we see a plethora of small piecemeal remedies, such as collective action clauses, insurance solutions for countries under stress from natural disasters or improving the technical work of DMOs – each of these a potentially useful measure, but even combined no substitute for an effective sovereign debt workout mechanism, once the default has become inevitable.
There was a broad majority in the UN GA in 2014 in support of developing a timely, effective and fair crisis resolution mechanism. FfD should urgently take this effort up again and build on the work that has been done in that context, such as the UNCTAD roadmap and guide for a sovereign debt workout.