Representatives of member States contributing to discussions at the sixty-second session of the Trade and Development Board praised UNCTAD's work on sovereign debt crises and the search for a new mechanism to deal with them.
Debt sustainability for development and the need to improve existing debt restructuring processes was the subject of a high-level segment of the Trade and Development Board, UNCTAD's governing body on 14 September. The debate followed the adoption of Basic Principles on Sovereign Debt Restructuring Processes by the United Nations General Assembly on 10 September.
The discussion contrasted core problems and successful policies in debt management that countries have experienced. Several delegations said that this topic was timely, pertinent and highly relevant for developing countries, and welcomed inputs provided by UNCTAD.
The current macroeconomic environment of rising interest rates and falling commodity prices has placed the debt sustainability of many countries in jeopardy, suggesting an increased risk of sovereign debt problems in the future. It was noted that many countries will continue to be vulnerable to changes in external conditions that may undermine their debt sustainability and development. Most delegations and panelists agreed that the international community will need a multilateral approach to debt restructuring to handle these problems collectively.
So-called "vulture funds" were raised and discussed, where many saw these posing a potentially significant risk to debt sustainability. The panelist from Argentina shared his country's recent experience with this phenomenon, highlighting the damage "vulture funds" can inflict on a debt restructuring process.
UNCTAD's work as the substantive Secretariat to the Ad Hoc Committee on Debt Restructuring Processes was greatly appreciated as were its research and analysis inputs on this matter. Many delegations agreed that the Basic Principles adopted in resolution A/69/L.84 were an important step towards promoting improved debt restructuring processes. Member states invited countries that have not yet engaged in the dialogue to do so.
There was agreement that UNCTAD played an important role in providing research, analysis, technical assistance and support to the consensus-building process in the area of debt. Its work serving as the Secretariat to the Ad Hoc Committee was widely appreciated and countries supported its continued engagement in the process. UNCTAD should also follow up on the General Assembly resolution and implementation of the Basic Principles.