“As the frequency and severity of such debt crises have increased, and they are no longer isolated to developing countries, the need for timely, impartial and transparent resolutions of debt problems has become more acute for all countries,” the Secretary-General of the UN Conference on Trade and Development (UNCTAD), Mukhisa Kituyi, told participants in Geneva.
This will require reforms to the international financial architecture that create more effective mechanisms for the prevention of crises as well as their timely resolution, he added.
Kituyi called for the UNCTAD-formulated set of Principles on Responsible Sovereign Lending and Borrowing should be increasingly applied, and called for international reforms leading to an “agreed mechanism for debt workouts” to be used if a new round of debt crises occurs.
The three-day Debt Management Conference – organized every two years by UNCTAD – focuses on debt sustainability, mechanisms for preventing crises, and management strategies.
The event brings together representatives of Governments, international organizations, academia, the private sector, and civil society, according to its website.
This year’s meeting comes as the trend of debt to GDP has reversed for the first time since 2000 to 22 per cent, up from 21 per cent in 2011.
Continued stagnation in advanced economies recently caused a “sharp contraction of export growth” in developing and transition countries, Kituyi said, noting also the impact of high levels of unemployment and a corresponding need for social services increased Government expenses.
Additionally, capital flows to poor countries had become more volatile as the picture for long-term interest rates in the advanced economies shifted, over speculation on when government stimulus measures there would be “tapered off.”
While “no reason for alarm”, Kituyi said, the new challenges are a cause for vigilance.
UNCTAD Secretary-General Mukhisa Kituyi. Photo: UNCTAD