The Minister of International Development of Norway, H.E. Mr. Heikki Holmås, announced last Friday that Norway would carry out an audit of developing countries’ debts to Norway, and a review of the loans that Norway has made, on the basis of the Principles on Promoting Responsible Sovereign Lending and Borrowing consolidated by UNCTAD.
Norway will be the first State to consciously and concretely implement the aforementioned Principles. These Principles aim at debt crisis prevention through reinforcing the responsibilities of sovereign borrowers as well as lenders to sovereigns in their debt contracting practices ex ante and ex post, and emphasizes the need of perfecting procedures and putting in place adequate institutions.
It is hoped that the effort made by Norway to implement the Principles and act as a role model of responsible sovereign lending will be the start of a larger international endeavour to promote a culture of responsibility in international finance which was much neglected by many lenders and borrowers in the years leading to the global financial crisis.
“Norway will continue to be a responsible lender.
We hope this work will inspire other lenders to initiate similar reviews and thus become better lenders too.”
H.E. Mr. Heikki Holmås
Minister of International Development of Norway
Annual United Nations General Assembly resolutions on external debt have repeatedly stressed the importance of promoting responsible sovereign lending and borrowing.
In December 2010, the General Assembly emphasized the need for creditors and debtors to share responsibility for preventing unsustainable debt situations and encouraged Member States, the Bretton Woods institutions, regional development banks and other relevant multilateral financial institutions and stakeholders to pursue the ongoing discussions within the framework of UNCTAD’s Initiative to promote responsible sovereign lending and borrowing.
Identifying agreed principles to guide sovereign lending and borrowing is the first step in this process. Thus, UNCTAD continues its process to encourage an increasing number of countries to formally endorse the Principles, as Norway and a range of other proactive countries have already done.
At UNCTAD XIII in Doha, Qatar in April this year, UNCTAD member States agreed in the Doha Mandate that "Adequate regulation and supervision of financial markets, debt management, and promotion of responsible sovereign lending and borrowing can play important roles with regard to promoting financial stability as well as with respect to crisis prevention and resolution mechanisms."
UNCTAD is now reaching out to obtain national and regional feedback on the design and the possible and voluntary implementation process of the Principles from UN Member States, essentially through Consultative Regional Meetings.